in the early 19th century. Insurance became more sophisticated in
Enlightenment era Europe, and specialized varieties developed. Some forms of insurance developed in
London in the early decades of the 17th century. For example, the will of the English colonist
Robert Hayman mentioned two "policies of insurance" taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of £100 each, one related to the safe arrival of Hayman's ship in
Guyana and the other was in regard to "one hundred pounds assured by the said Doctor Arthur Ducke on my life".
Property insurance Hamburger Feuerkasse () in 1676 became the first officially established
fire insurance company in the world, and the oldest existing insurance enterprise available to the public.
Property insurance as we know it today can be traced to the
Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir
Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667". A number of attempted fire insurance schemes came to nothing, but in 1681,
economist Nicholas Barbon and eleven associates established the first fire insurance company, the "Insurance Office for Houses", at the back of the Royal Exchange to insure brick and frame homes. Initially, 5,000 homes were insured by his Insurance Office. contract. In the wake of this first successful venture, many similar companies were founded in the following decades. Initially, each company employed its own
fire department to prevent and minimize the damage from conflagrations on properties insured by them. They also began to issue '
fire insurance marks' to their customers. These would be displayed prominently above the main door of the property and allowed the insurance company to positively identify properties that had taken out insurance with them. One such notable company was the
Hand in Hand Fire & Life Insurance Society, founded in 1696 at Tom's Coffee House in
St Martin's Lane in
London. It was structured as a
mutual society, and for 135 years it operated its own fire brigade and played an important part in shaping fire fighting and prevention. This system was soon exposed as terribly flawed, as rival brigades often ignored burning buildings once they discovered that it had no insurance policy with their company. Eventually, a solution was agreed upon in which all the insurance companies would supply money and equipment to a
municipal authority charged with stationing fire prevention assets and
firefighters equally around the city to respond to all fires. This did not solve the problem entirely, as the brigades still tended to favor saving insured buildings to those without any insurance at all. In
Colonial America, the first insurance company that underwrote fire insurance was formed in Charles Town (modern-day
Charleston),
South Carolina in 1732.
Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly
property insurance to spread the risk of loss from fire, in the form of
perpetual insurance. In 1752, he founded the
Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company made contributions toward fire prevention. Not only did his company warn against certain fire hazards, but it also refused to insure certain buildings where the risk of fire was too great, such as all wooden houses.
Business insurance was the first marine insurance company. At the same time, the first insurance schemes for the
underwriting of
business ventures became available. By the end of the seventeenth century, London's growing importance as a center for trade was increasing demand for
marine insurance. In the late 1680s, Edward Lloyd opened
a coffee house on
Tower Street in
London. This was during a boom of several hundred coffee house gathering places in London, many catering to certain social groupings of clientele. Lloyd's clientele tended to be ship owners, merchants, and ships' captains. This enabled Lloyd's Coffee House to become a reliable source of the latest shipping news. Such news included information about the sinking of ships and other ship/cargo losses. Because of this, Lloyd's became the meeting place for parties in the shipping industry to do business for having their cargoes and ships insured, with those willing to underwrite such ventures. These informal beginnings led to the establishment of the insurance market
Lloyd's of London and several related shipping and insurance businesses. In 1774, long after Edward Lloyd's death in 1713, the participating members of the insurance arrangement formed a committee and moved to the
Royal Exchange on
Cornhill as the
Society of Lloyd's. Since its inception, Lloyd's has operated not as an insurance company but as a gathering place of individuals (and more recently, small groups of individuals) issuing insurance policies. In 1720 the
Royal Exchange Assurance Corporation received its royal charter under the
Royal Exchange and London Assurance Corporation Act 1719. The act established this corporation as Great Britain's exclusive corporate insurer of marine property but allowed individuals in and outside of the Lloyd's consortium to underwrite insurance if unincorporated. From 1741 to 1750 the corporation was headed by multinational merchant, attorney, and author
Nicholas Magens. Once established, insurance underwriters such as those at Lloyd's gradually over many decades moved into other lines of insurance business. In this same very gradual manner, most fire insurers have expanded their scope of business to insure against other causes of loss to buildings and their contents. Many have also filled a need for insuring business and personal liabilities, such as injuries caused by defective products and premises. This fuller range of insurance lines has become today's worldwide modern market of property-liability insurance.
Life insurance The first
life insurance policies were taken out in the early 18th century. The first company to offer life insurance was the
Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by
William Talbot and
Sir Thomas Allen. The first plan of life insurance was that each member paid a fixed annual payment per share on from one to three shares with consideration to age of the members being twelve to fifty-five. At the end of the year a portion of the "amicable contribution" was divided among the wives and children of deceased members and it was in proportion to the amount of shares the heirs owned. Amicable Society started with 2,000 members. , established in 1706, was the first
life insurance company in the world. The first
life table was written by
Edmund Halley in 1693, but it was only in the 1750s that the necessary mathematical and statistical tools were in place for the development of modern life insurance.
James Dodson, a
mathematician and
actuary, tried to establish a new company that issued premiums aimed at correctly offsetting the risks of long term life assurance policies, after being refused admission to the
Amicable Life Assurance Society because of his advanced age. He was unsuccessful in his attempts at procuring a charter from the
government before his death in 1757. His disciple,
Edward Rowe Mores was finally able to establish the
Society for Equitable Assurances on Lives and Survivorship in 1762. It was the world's first
mutual insurer and it pioneered age based premiums based on
mortality rate laying "the framework for scientific insurance practice and development" and "the basis of modern life assurance upon which all life assurance schemes were subsequently based". Mores also specified that the chief official should be called an
actuary—the earliest known reference to the position as a business concern. The first modern actuary was
William Morgan, who was appointed in 1775 and served until 1830. In 1776 the Society carried out the first actuarial valuation of liabilities and subsequently distributed the first
reversionary bonus (1781) and
interim bonus (1809) among its members. The sale of life insurance in the U.S. began in the late 1760s. The
Presbyterian Synods in Philadelphia and New York founded the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers in 1759;
Episcopalian priests created a comparable relief fund in 1769. Between 1787 and 1837 more than two dozen life insurance companies were started, but fewer than half a dozen survived.
Accident insurance . In the late 19th century, "accident insurance" began to become available. This operated much like modern
disability insurance. The first company to offer accident insurance was the Railway Passengers Assurance Company, formed in 1848 in England to insure against the rising number of fatalities on the nascent
railway system. It was registered as the Universal Casualty Compensation Company to: The company was able to reach an agreement with the
railway companies, whereby basic accident insurance would be sold as a package deal along with travel
tickets to customers. The company charged higher premiums for second and third class travel due to the higher risk of injury in the roofless
carriages.
National insurance Germany By the late 19th century, governments began to initiate national insurance programs against sickness and old age.
Germany built on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s. In the 1880s Chancellor
Otto von Bismarck introduced old age pensions, accident insurance and medical care that formed the basis for Germany's
welfare state. His paternalistic programs won the support of German industry because its goals were to win the support of the working classes for the Empire and reduce the outflow of immigrants to America, where wages were higher but welfare did not exist. under
David Lloyd George (right) boasts of passing the
National Insurance Act of 1911
Great Britain In Britain more extensive legislation was introduced by the
Liberal government, led by
H. H. Asquith and
David Lloyd George. The
National Insurance Act 1911 gave the British working classes the first contributory system of insurance against illness and unemployment. All workers who earned under £160 a year had to pay 4 pence a week to the scheme; the employer paid 3 pence, and general taxation paid 2 pence. As a result, workers could take sick leave and be paid 10 shillings a week for the first 13 weeks and 5 shillings a week for the next 13 weeks. Workers also gained access to free treatment for tuberculosis, and the sick were eligible for treatment by a panel doctor. The National Insurance Act also provided maternity benefits. Time-limited unemployment benefit was based on
actuarial principles and it was planned that it would be funded by a fixed amount each from workers, employers, and taxpayers. It was restricted to particular industries, cyclical/seasonal industries like construction of ships, and neither made any provision for dependants. By 1913, 2.3 million were insured under the scheme for unemployment benefit and almost 15 million insured for sickness benefit. This system was greatly expanded after the
Second World War under the influence of the
Beveridge Report, to form the first modern
welfare state.
United States The
World War Adjusted Compensation Act, or Bonus Act, was a United States federal law passed on May 19, 1924, that granted a life insurance policy to veterans of military service in World War I. It led to the
Bonus Army of 1932 when veterans demanded immediate payment of the policy. They were forcibly removed by the Army from protest sites around Washington D.C. They were finally paid in 1936 by the
Adjusted Compensation Payment Act In the United States, until 1935, the federal government did not mandate any form of insurance upon the nation as a whole. However there had been generous benefits for military veterans, and this became a model for the American welfare state. The passage of the
New Deal's 1935
Social Security Act expanded the concept and acceptance of insurance as a means to achieve the individual financial security for all older workers. That expansion experienced its first boom market immediately after the World War II. With the original
G.I. Bill of 1944 came large-scale programs that greatly expanded the ideal that educational expenses and affordable housing mortgages were benefits of having served. The mortgages that were underwritten by the federal government during this time included an insurance clause as a means of protecting the banks and lending institutions involved against avoidable losses. During the 1940s there was also the GI life insurance policy program that was designed to ease the burden of military losses on the civilian population and survivors. ==Notes==