How and insurance started
Where there is a human society, insurance exists, maybe because insurance appears simultaneously with the human society. This is true because nowadays, every person needs insurance.
How and where did this insurance start?
In the ancient times, when a certain property of a person is lost, his neighbors were involved to recover it. When his residential house is burned, his neighbors cannot afford not to help him rebuilt it. The neighborhood joined hands together to help the fire victim in many ways. This was done before in any countries where money economy with its financial instruments was not yet widespread.
This practice was changed later with the birth of insurance. Insurance started with the Chinese and the Babylonian merchants. Chinese businessmen and traders before used to travel by boat or ship passing dangerous rivers or bodies of waters. To protect their merchandise, they did not place them in one vessel only; instead they used to have them loaded in several vessels so that when an event occurred to destroy their trades, not all their goods will be affected. In this way the risk is distributed. They would still have goods to trade.
For the Babylonians, especially a merchant when he receive a loan to finance his shipment, he should pay the lender an additional sum in exchange for the guarantee given to cancel any balance of the loan should there be anything happen to the shipment especially when they lost or stolen at sea.
In ancient Persia, the first to purchase insurance were the monarchs. They bought this for their people. This was made official by registering the insuring process with the government notary office. These were done during the early years when the leaders of the ethnic groups presented gifts to the monarchs. When the gift was worth more than 10,000 Derrik (Achaemenian Gold) the issue is presented to a higher office. The purpose of registering was that when a person who gave or presented the gift encounters a problem or in trouble, the court will help him.
Thousand years later, the concept of “general average” was invented by the inhabitants of Rhodes, wherein the merchants whose goods were shipped together would pay a proportionate premium which would be used to reimburse in case their goods were jettisoned during a storm or when the ship or the vessel sank.
The Health Insurance was introduced by the Greeks and the Romans. They organized a group who cared for the families and paid funeral expenses when somebody in the group died.
Before, “friendly societies” existed in England wherein people donated certain amount of money that could be used in case of emergencies. It was in the 17th century that the insurance was established. Some forms of insurances had developed by the early decades of the seventeenth century.