An Early History of Insurance

9.7.1 An Early History of Insurance

Car insurance, as we all know, is a legal requirement for driving on Britain’s roads, but insurance as a concept has been around much longer than cars have, and even longer than Britain in its current format has. Here’s a quick run through some of the early history of insurance.

The first insurance policy as we know it was codified in the Code of Hammurabi around 1750BC. Hammurabi’s code was the first comprehensive codified law system and included a style of insurance practiced by early Mediterranean sailing merchants. If the merchant received a loan to help with his trading, he often agreed to pay an additional sum in exchange for a guarantee to cancel the loan should the shipment be stolen.

A type of insurance more familiar with us was that invented in modern day Iran. The heads of different ethnic groups would, each year, give the monarch a present. If the present was deemed to be valuable enough it was registered in a specific office, subsequently, if the giver of the present should then find himself in trouble, he could receive from the court a sum up to double the worth of his original gift.

Perhaps the most direct connection that can be found between car insurance and early forms of insurance comes from Genoa in the 14th century. These individual insurance contracts were based on the prevalent form of transport of the day, the ship.  Whilst insurance wasn’t a requirement, it was a good idea for merchant mariners and a variety of specialised varieties developed for ships just as can be found today for cars. This then was developed in London by a certain Mr. Edward Lloyd who opened a coffee house that became popular with mariners, and then a place for those willing to underwrite merchant ventures. The coffee house has become known today as Lloyd’s of London and is a world leader for marine insurance.

Moving swiftly on towards modern types of insurance, before the arrival of insurance companies in the late 17th century in England, “friendly societies” existed, building on the Greek and Roman “benevolent societies.” These friendly societies paid amounts of money into a general sum which could then be used for emergencies.

It was the Great Fire of London which precipitated the invention of the first modern insurance company as we know it. In 1680, Nicholas Barbon opened an office to insure brick and frame homes against the depredations of fire.

From the earliest arrival of the automobile car insurance was available, the first recorded liability insurance was written in England in 1895, though it was extremely expensive. From then it was not long before countries introduced mandatory car insurance laws, and insurance grew cheaper as the market became more competitive. Today thousands of companies offer insurance, with dedicated providers such as Kwik Fit Insurance coming as recommended for car insurance.