From Whence Doth Insurance Come?
From whence did the need for insurance come? It doth appear first of all in the Middle ages. Now there didst a need for financial security in marine produce transportation, travel and earnings be! Hence did investors of superior intellect undertake to implement insurance companies.
Insurance was not an entirely foreign concept in the middle ages. Even then, people realised a need for protection from dangers and a guarantee of your income in case of illness. This led to the introduction of marine insurance and health insurance.
Marine insurance came about in a coffee shop called “Edward Lloyd’s”. Entrepreneurs might approach potential investors eating in the coffee shop with a business proposal. The investor would extend financing if he was interested. The loan would be repaid in the event the vessel managed to get back to port after its trip. This is similar to a small business loan.
To assure a return on the investment, the investor would get a guarantee or agreement from yet another financier who would guarantee the investor would get their money back, if the ship returned or not. The investor paid for this luxury possibly on a monthly basis or perhaps in the form of a cut of the proceeds from the sale of the ship’s freight. These last financiers ended up being a primitive form of insurance companies.
In the middle ages many merchants and tradesmen were a part of a guild. Being part of a guild had a variety of advantages. One of which would have been a primitive type of health insurance. The guild was not able to invest money with insurance companies, so they accumulated money through members in the guild to help a fellow guild member when they became seriously ill and unable to work. The cash was collected on a monthly basis, it essentially formed part of the members’ guild fees, the fee charged to people for the privilege of being part of the guild.
So, as you can tell, insurance companies have been in existence for hundreds of years in some form or another. Individuals are renowned for seeking some security if they spend money on something. People paying for marine ventures would certainly demand a guarantee that they would certainly have a return on their investment if the ship returned or not and members of any guild wanted a guarantee that their families could be provided for even if they were unable to work.
The same concept applies now. People want to know that they’ll have the ability to replace their items or belongings when it comes to a catastrophe or theft. For this reason they take out insurance, to ensure they do not end up destitute should things go horribly wrong.
And thus ends the tale of the beginnings of insurance companies. Investors of superior intelligence did gather in a coffee house and conclude that security was needed. Guild leaders elected to permit members some funding should they become ill so that they may recover and resume complete operation in the guild. And so it will continue until the end of time.
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