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The evolution of insurance

There is a timeline to everything. Yes, even insurance. Where did it all start? Where did the idea of trading money risk originate? Before cars were even thought of, before medical insurance was a necessity – why was insurance invented? Keep reading to find out the interesting discovery of insurance.


Yes, even before the Common Era there was some form of insurance. It wasn’t for cars or home, it was used more for trading. E-insurance explains that Chinese merchants were the first people to propose insurance. Through shipwrecks, merchants could lose all of their valuable goods. To get around the possible risk they devised a plan where merchants divided their goods onto a different number of ships – this way in case of a shipwreck, only small amount of good would be lost instead of it all.

Around 1790 BCE insurance was reinvented to be similar to today’s insurance. Not only was shipwreck a problem, thieves and pirates were also a concern. Bottomry was then introduced. Webster dictionary defines this as “a contract under which the owner of a ship pledges the ship as collateral for a loan to finance a journey”. Only after the arrival of the ship, did the owner have to pay back the lender what he borrowed. If the ship was lost or destroyed the lender then lost his investment.

Fire Insurance

Sunday, September 2, 1666, London England is also known as the ‘Great Fire of London’. This was a three-day fire that started at the king’s baker’s home. Many homes and churches were destroyed, people leaving London in droves to get away from the wind enforced fire. Shortly after this period, two English insurance companies were formed.


Around 1750, fire insurance became the first known insurance in America. Ben Franklin, with the help of the Philadelphia Contributionship, established the first fire insurance company. This was because – at the time – houses were still made of wood, and positioned very close together.

Soon after fire insurance was set in America, Franklin came up with the idea of life insurance. There was much backlash at the thought of putting a price on someone’s life. After years of understanding that this could potentially help widows and orphans, people warmed up to the idea.

Though the industrial revolution more types of insurance where needed. This included medical/health, business and disability insurance. Medical and health insurance were brought forth for the risk of accident-related expenses. Business insurance evolved from protection over the building, to protection over data and systems. The more complex and risky business ventures became the more insurance has to grow and evolve with it.


You may not think of a car as being ‘heavy machinery,’ but when the car was first invented it was dangerous and risky. Not long after the first car came off the assembly line did car insurance evolve. Car accidents were once the leading cause of deaths in the United States. This also brings along with it liability insurance.

Today more than ever insurance is changing and evolving. Starting from Chinese merchants to online .com clicks insurance proves that a lot of things in life can have a risk – whether small or not – getting insurance can help you.

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