History of Insurance
It was in 2100BC when evolution of insurance took place. King Hammurabi of Babylon, an ancient Mesopotamian city; introduced this concept because of growing trading markets and increased losses caused by thefts or other natural calamities.
Code Of Hammurabi
Hammurabi code was implemented which contained punishment laws for crimes and settling the disputes amongst the people. The code also ensured traders owning cargo ships to get reimbursement on the losses during transportation in the form of unforeseen losses or thefts. In return owners were required to declare their losses before god upon which compensation was be made by the state. Thus state’s first insurance was offered.
The concept started spreading in other countries and was mainly adopted by tradesmen in Greece and insurance for their goods also started resulting in transport and cargo insurance. Thus businesses started accepting insurance.
Instance of first life insurance can be found in roman era in the form of burial insurance. After collecting money from the members support was provided to the families losing their loved one. Similarly the instance of first health insurance was found in medieval times when major diseases like plague started spreading and affected families and its members were given assistance to run their daily lives.
The widespread of this insurance concept reached America and companies started insuring their businesses in order to overcome losses because of natural disasters like earthquakes, floods etc. People from every society started realizing its importance wanted to get financially secured from any type of disasters. Farmers opted for insurance for their crops, individuals wanted for the protection of his bank deposit.
Unpredictability has given to rise to insurance; which is nothing but a risk of financial loss sharing among large number of individuals. It is believed that the concept of risk sharing originated in China in 13th century. The farmers from China marketed their crops by sending them on boats. But boat sinking resulted in loss of crops which eventually resulted in shipping the crops in more than one boat so that risk of crop losses can be shared. In simple words, financial catastrophe incurred by one family was spread between many. Opulent business people started the process of receiving small amount of money from owner of the ship and agreed upon paying for the losses caused to the ship.