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The History Behind Insurance

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posted on Aug, 26 2009 @ 08:25 AM
Insurance 101

Crawling around in the back of my mind is a question I've often wondered about. How did the insurance industry begin, when and why. Are we not seeing the impact of an insurance mega-industry which has taken control of our freedom to be self-sustaining in every aspect of our lives? Do we not consciously consider our responsibilities and repercussions thereof in a mature way because we must purchase an insurance "policy" to protect us from poor choices, accidents, and ignorance?

If in the beginning, insurance policies were in fact, to spread the risk, then how did that practice become commonly accepted Law around the globe? These days, it is illegal to perform certain activities without purchasing insurance policies. The concept of "insurance" is to spread the risk.

What if I don't want to buy insurance, what if I want to maintain my own responsibility in everything I do? Too bad for me. The only choice I have is to buy the insurance or pay the penalty for not having it. Risk is a part of life. Is it not an illusion to believe that purchasing insurance policies keeps risk low for the policy holders? IMO, the law demanding insurance be maintained for certain activities prevents freedom of choice. Or at the very least, inhibits those freedoms.

The History of Insurance

If risk is like a smoldering coal that may spark a fire at any moment, then insurance is our fire extinguisher.

Countries and their citizens need something to spread risk among large numbers of people and to move risk to entities that can handle it. This is how insurance emerged. Read on to learn about how insurance evolved and how it can work to protect you from being burned by risk.(

King Hammurabi's Code
The main concept of insurance - that of spreading risk - has been around as long as human existence. Whether it was hunting giant elk in a group to spread the risk of being the one gored to death or shipping cargo in several different caravans to avoid losing the whole shipment to a marauding tribe, people have always been wary of risk.

The first written insurance policy appeared in ancient times on a Babylonian obelisk monument with the code of King Hammurabi carved into it. The "Hammurabi Code" was one of the first forms of written laws. These ancient laws were extreme in most respects, but it offered basic insurance in that a debtor didn't have to pay back his loans if some personal catastrophe made it impossible (disability, death, flooding, etc.).

Does anyone remember when apprenticeships were commonplace and why the practice has become a relic of the past?

Guild Coverage

In the dark and middle ages, most craftsmen were trained through the guild system. Apprentices spent their childhoods working for masters for little or no pay. Once they became masters themselves, they paid dues to the guild and trained their own apprentices. The wealthier guilds had large coffers that acted as a type of insurance fund. If a master's practice burned down, a common occurrence in the wooden hovels of medieval Europe, the guild would rebuild it using money from its coffers. If a master were robbed, the guild would cover his obligations until money started to flow in again. If a master were suddenly disabled or killed, the guild would support him or his widow and family. This safety net encouraged more and more people to leave farming and take up trades. As a result, the amount of goods available for trade increased, as did the range of goods and services available. The style of insurance used by guilds is still around today in the form of "group coverage".

Insurance replaced apprenticeships. Nowadays, we are expected to go to college to learn our trades. The practice of paying a guild fee has become the practice of paying college fees.

Insurance and the Stock Exchange

The practice of underwriting emerged in the same London coffeehouses that operated as the unofficial stock exchange for the British Empire. In the late 1600s, shipping was just beginning between the New World and the old as colonies were being established and exotic goods were ferried back. A coffeehouse owned by Edward Lloyd, later of Lloyd's of London, was the primary meeting place for merchants, ship owners and others seeking insurance.

Having recognized the extreme profitability and power of issuing maritime insurance, fire and plague became the next lucritive reason for requiring insurance. This practice began here:

In 1666, the great fire of London destroyed around 14,000 buildings. London was still recovering from the plague had that ravaged it a year earlier, and many survivors found themselves without homes. As a response to the chaos and outrage that followed the burning of London, groups of underwriters who had dealt exclusively in marine insurance formed insurance companies that offered fire insurance. Armed with Pascal's triangle, these companies quickly expanded their range of business. By 1693, the first mortality table was created using Pascal's triangle and life insurance soon followed.

America takes a little longer to play the insurance game and with great reluctance. Insurers were not prepared to "protect" against the "risks" inherent in establishing a new world. Until a profit could be realized, insuring against the inherent risks were taken by pioneers and colonists. For over a hundred years, the colonists managed their risk without mandatory (or even optional) insurance coverage.

Insurance companies thrived in Europe, especially after the industrial revolution. In America, the story was very different. Colonists' lives were fraught with dangers that no insurance company would touch. As a result of lack food, wars with indigenous people and disease, almost three out of every four colonists died in the first 40 years of settlement. It took more than 100 years for insurance to establish itself in America. When it finally did, it brought the maturity in both practice and policies that developed during that same period of time in Europe.

Insurance should be optional, not mandatory. Insurance companies are the giants of the monetary world. Its no wonder why.

So, now I know when, why and how the insurance industry began.

posted on Aug, 26 2009 @ 08:49 AM
For a little additional perspective on the impact of insurance, its history and use. Are we as a civilization preparing for a return to the second kind of insurance? I sure hope so.

History of insurance refers to the development of a modern laws and market in insurance against risks. In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future.


posted on Aug, 26 2009 @ 09:24 AM
In my humble opinion, I believe insurance and taxes are the most evil of evil! They are not used correctly and cause problems because of greed and power. Sure, it works in some cases but how come people are left miserable because of these things?

Why can't we pay for something once to own it and that's the end of it. How come it needs to be taxed? Why are silly things like rainwater taxed?

Why are we paying money "just in case" something happens. Health insurance is a complete different matter in my view, so that doesn't count.

Money sucks. You pretty much have to pay money to breathe and be alive.

posted on Aug, 26 2009 @ 09:31 AM
interesting post w/neat info. Don't forget the "indulgences" sold by the catholic church to insure salvation and limited times in purgatory! (the original fire insurance)

posted on Aug, 26 2009 @ 09:35 AM
reply to post by Asktheanimals

Interesting! I never heard of that before. Could you elaborate a little?

I think insurance is a gigantic ponzi scheme that plays on our sensibilities. Why not take more risks since the insurance will cover it? The only reason for making insurance into law is total power and control. Power over our choices and actions and control over our lives, how we live them and how we must cooperate to make the insurance giants (bankers.lobbyists) richer and more powerful. But I never once considered the possibility of religious insurance. You got me thinking.

posted on Aug, 26 2009 @ 09:37 AM

interesting post w/neat info. Don't forget the "indulgences" sold by the catholic church to insure salvation and limited times in purgatory! (the original fire insurance)

You know, in my art history class last night, my professor discussed a piece of art the showed how the catholic church back in the middle ages "prepared" people for death from the bubonic plague. You know how they did that? They wrote books about how instead of giving all your money to help your family after you die, give them money to the church because your family will probably die too!

Even funnier, the art depicting this had a sick man in bed with demons and "holy people" surrounding them. The demons were telling the man that he should give the money to help his family while the "holy people" were telling him to give it to the church instead to ensure him getting into heaven.

How hilarious!

posted on Aug, 26 2009 @ 09:38 AM
reply to post by dnttreadonme900

I agree. I used to work for a financial firm that specialized in retirement plans and personal wealth management. Diversify! Spread the risk. Get rich quick, etc. Something for nothing. A mindset and way of life that only benefits the insurance companies.

posted on Aug, 26 2009 @ 09:43 AM
reply to post by dnttreadonme900

It would be great if you could get a link to that artwork. It sounds familiar.

Religion and guilt go together like peanut butter and jelly. The perfect pair. Just like insurance and risk. Its just a sick and lazy mindset carved into law.

posted on Aug, 26 2009 @ 09:58 AM
One more thing I forgot to explore in the original post is the fact that without medical insurance, drug addicts have no possible means of receiving treatment for detoxing or rehabilitation. Unless the addict is a pregnant woman or a commits a crime, there are precious few programs for them.

My daughter became addicted to pain killers after cervical cancer surgery. By the time the prescriptions ran out, she was carrying a monkey on her back because of the pain medication she was given. By the time she realized she was addicted it was too late for her. She asked me to help her out because she didnt' have insurance, was not preganant, nor had she committed a crime, therefore, was ineligible for rehabilitation unless someone with insurance or a large bank account would sign for her into the "program".

posted on Aug, 26 2009 @ 10:02 AM

As I googled the name, which is ars moriendi, a lot more other similar wood block carvings came up. All seem to portray the same message.

posted on Aug, 26 2009 @ 10:33 AM
reply to post by dnttreadonme900

Any time some one else is managing money matters for you, greed always play a role in it. Even the most honest person cannot resist the temptation. The greediest the more damage and harm does to the management of assets. It is the law that keeps them in line. Smart people avoid some one else to manage money matters for them. Good example would be people live in Cities (USA) pay through the nose for property taxes. What you get out of it compare to those that live in country side and pay no or very little property taxes. What will happen if we abolish city Government. You will never become homeless because you didn't pay property taxes. Every year the County assess the property value to increase the taxes.The value of homes dropped considerable in the last few years but the taxes didn't drop. I know in some countries the value of old homes go down but in USA it keeps going up every year. Because it is the county and government behind it to keep pushing it up. One time I contested my property value. The officials in county was telling me that the value of my property went up. I told them to buy it from me for 10 Grand less and the answer was, "we are not in business of buying or selling".

posted on Aug, 27 2009 @ 11:41 AM
reply to post by Hazelnut

Hi Hazel! During the middle ages the catholic church got the bright idea of selling forgiveness for small crimes and "thought crimes" against the church. Those were called indulgences and of course the greater the sin, the bigger the payment.

Then the church got really, extra-special, super-duper smart! they started the Inquisition! Instead of selling forgiveness they could just arrest you and take all of your money and possesions. When they ran out of living people to terrorize they started digging up corpses, putting them on trial for heresy and taking all of their descendant's inheritance money. Can you imagine putting a corpse on trial? How insane is that? Oh yes, and few enterprising cardinals actually sold inquisition insurance where if you paid them they would promise to look elsewhere for victims.
This was why Martin Luther posted his 10 theses on the door of the church of nuremburg and started the Protestant movement.
Ah good ole religion, always there when you need to be terrorized or just for good laugh.

[edit on 27-8-2009 by Asktheanimals]

posted on Aug, 27 2009 @ 12:23 PM
IMO property & auto insurance is a good thing. First off, with your vehicle, it protects the lender while you pay the note. Once the note is paid off, then you can drop to liability only. Liability is important because it can shield you from a total financial loss in the event you are responsible for an accident. It covers the fault free individual from having to pay for a loss they did not create. The costs of auto accidents can be astounding. I know first hand, as I worked as a liability claims investigator for 5 years. Insurance protects you, but more importantly, it protects everyone else from you.

The same principle applies to home owner's insurance. Except, when the house is paid for you do not HAVE to carry insurance at all. But you would be well advised to have insurance and be a part of the "shared risk pool". If you chose not to have insurance and your neighbors chose not to either. Then if a fire occurs and spreads to your neighbor's house...or god forbid several houses, then there would be no way you could make yourself "whole" again.

Now I don't work in insurance anymore, and I can truly say I hate the industry; however I can defend the justification for it. It's not a scam. Hopefully you go your whole life paying in to the insurance pool and never have to file a claim. However, if and when you do, then you will feel fortunate that you did have it and will be thankful that insurance is there to protect you.

Just my 2-cents

EDIT: BTW S&F for the research & effort

[edit on 27-8-2009 by Aggie Man]

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