The history of insurance is a long one to say the least. The history of insurance has been traced back to 1750 B.C. and even further, most notably from the Chinese. It is said that it began with the process of distributing risk amongst Chinese merchant ships. The idea of distributing risk is still the foundation for which insurance is built on today. Chinese shipping yards would evenly distribute their products and goods amongst their boats so that while traveling rough waters, not all was lost in the event of a boat cap sizing. Before this practice, if a few ships carried the majority of the valuable goods, their value was too much in the event of a loss. Before long, fellow traders started practicing this idea themselves. They would pair up before shipping out and evenly split their goods so that neither one of them lost everything, but in the event of a cap size, each person would lose some.

The Greeks and Romans further developed insurance and introduced the concepts of life insurance and health insurance near 600 B.C. They created guilds called “benevolent societies” in which all members would contribute money. They used this money to help protect the families of deceased members and also to help pay for funeral expenses of members. Advancing through this time and throughout the middle-ages the idea of insuring goods was strongly introduced. Property insurance as we now know it can be traced to the Great Fire of London, which destroyed over 13,000 houses in 1666. Fire insurance quickly became the most popular type of insurance throughout the world. The first insurance company in the United States underwrote fire insurance and was formed in Charleston, South Carolina in 1732. This company provided fire insurance only.

Ben Franklin helped popularize the standard practice of property insurance in Philadelphia throughout the 1700’s. Philadelphia was a key city in the development of the insurance industry in America. Insurance practices from Philadelphia quickly spread and developed all along the eastern seaboard. Further expansion of these practices was undertaken in such cities as Baltimore and New York City.

The 1900’s saw the most rapid progression of insurance practices the world has ever seen. Like many other industries during this time, advancements in technology and mathematics helped make assessing risk easier and more efficient for insurance companies. As insurance companies expanded and grew, they were able to invest more money in the development of their practices. This, along with state laws making auto insurance mandatory, helped the insurance industry take off and has brought us to where we are today. As stated before, insurance has an extremely long and complex history. Although this is a brief overview, we think we have touched on some of the main highlights that have brought insurance practices to where they stand now.