History of Insurance

The idea of insurance came from the need of risk-management, or a way to gamble on accidents. Insurance companies came about as a way to protect people from losing everything. Before insurance, accidents from fires or natural disasters would wipe a family out financially and merchants were at the mercy of theft.

Early History of Insurance

Insurance companies were developed to protect people from these sorts of incidents. The idea was based on protection in exchange for compensation. The earliest known forms of insurance policies date back to Babylonian times when traders needed assurance for the safe arrival of their goods. Insurance companies devised policies to help cover any loss in the event of an accident or theft during the delivery.
As businesses began to grow in trade and families began to realize the importance of staying protected in cases of accidents, the insurance industry became critical. People began to see the need to stay protected and as such, “gambled” on this idea by paying small amounts consistently to insure their safety in business, life and family.

Underwriters and Their Role

As the need for insurance rose, underwriters became an important aspect to the industry. The basic duty of the underwriter was to determine the risk in each insurance policy in order to accurately determine the value of a premium. The greater the risk, the higher the price of insurance.
Today the system is still in effect. Although there are basic outlines now to determine pricing, there are also different instances that may affect how a plan is written and what the premiums will be.

The Evolution

The evolution of insurance changed as every person realized the need to be protected in some way. What began as a means of protecting traders, has evolved into a mass understanding that protection comes at a small price for all areas in life. Accidents happen, theft happens and death happens; today insurance policies are a way to make sure that life is not completely altered if something devastating occurs.