History of Insurance Development in the World

08 March 2022

The types of insurance that we know today turned out to have a long history since the time of B.C. These types of insurance originated from a basic concept of insurance that is mitigation of various risks or threats, which then develop and evolve along with the development of human civilization.

For example, the concept of risk mitigation has existed since the time of Prophet Joseph. At that time, predictions about the threat of famine made Prophet Joseph advise the King of Egypt to backup the harvest in order to face the risk of famine that would occur in the future.

Then in 2250 BC, the Babylonians recognized the term bottomry bond or bottomry contract which was a guarantee of money loans made by the ship's captain for the cost of operating the ship. By 600 BC, India had also known the practice of Bottomry and the Greeks recognized the same term in 400 BC. Then in 215 BC, the Roman Empire recognized the concept of protection against the risk of loss of goods on ships due to maritime hazards such as storms or enemy attacks.

In 50 BC, philosopher Marcus Tullius Cicero presented the concept of protection or guarantee of the safety of remittances and securities during travel. In return, the protection party had to pay a certain amount of premium money to the guarantor. Furthermore, in 50-200 AD, Emperor Claudius issued a guarantee to the importer for all losses suffered due to hurricane winds. It was around 200 AD that a society called Collegia was born that aimed to be social in order to raise funds for funeral activities.

In the following years, the concept of insurance began to develop well which later became known to be the types of general insurance that exist today, among others are:

  1. Marine Insurance
    Insurance for transportation by sea and land began to be held in Italy in the 12th century. This custom was then brought by Italian traders to England around about 13th and 14th. Various records and events in the past were then compiled into the Marine Insurance Act 1906 (MIA 1906) which regulates the implementation of Marine Insurance. In fact, the sea transportation police in Indonesia also refers to MIA 1906.

  2. Fire Insurance
    Fire insurance was born in 1680 which was marked by the establishment of the first fire insurance company, The Fire Office or The Phoenix. The presence of fire insurance originated from a major fire that hit the city of London in 1666. The fire that lasted for 4 days caused such great losses that the rebuilding process was eventually completed in 1671.

  3. Personal Accident Insurance
    The birth of personal accident insurance stems from the many accidents that occurred in the 19th century along with the advancement of engineering and industry. At that time, accidents occurred in the process of operating modern tools, motor vehicles, and trains. In 1848, the first insurance company was found called The Railway Passenger Assurance Co. which risked self-accident on the operation of the railway. However, this type of insurance then develops and assumes the risk of other self-accidents. Even by the end of the 19th century, this type of insurance had guaranteed the risk of certain diseases. Further in the 20th century, it expanded again on the guarantee of hospital care costs.

  4. Employer Liability insurance
    This insurance was born in 1880 after the Employers Liability Act took effect. The Act was later perfected in 1897 with the issuance of the Workmen's Compensation Act (WCA) because the Employers Liability Act 1880 did not guarantee workers full coverage. Furthermore, in 1906, this regulation that only applied to certain companies was refined again into the 1906 WCA which applied to all types of companies.

  5. Other Liabilities Insurance
    The birth of the Employers Liability Act of 1880 also became the forerunner of liability insurance. The risk of a possible third-party lawsuit actually began to be realized in 1875. Therefore, the birth of empoyers liability act 1880 at that time triggered the issuance of third-party liability insurance policies, especially for building contractors.

  6. Burglary Insurance
    The insurance company that pioneered this type of insurance was Mercantile Accident and Guarantee Insurance Co. which in 1889 issued its inaugural policy. Previously, in 1897 one of the Lloyd's Underwriters had actually approved the extended coverage of fire insurance by adding to the risk of building demolition.

  7. Motor Vehicle Insurance
    In 1898, Law Accident Insurance Sociaty created a form of motor vehicle insurance to follow up on the enactment of the Locomotive on Highways Act 1896 which allowed carriage by motor vehicle. Furthermore, in 1930 the Road Traffic Act was issued which became the basis for the mandatory enactment of third-party liability insurance. Because, often people who suffer losses due to motor accidents do not get compensation from the owner of the vehicle.

  8. Engineering Insurance
    This type of insurance assumes the risks when erecting buildings or installing machines. This engineering insurance was born in the 19th century due to the frequent explosion of loud boiler steam. In 1858, the first steam boiler insurance company was established that provided regular steam boiler care services and also insurance protection. Along the way, a number of regulations were born such as the Explotion Act 1882 and the Factories Act 1937. In 1872 was born engine insurance (steam engine damage) and electrical equipment insurance around 1897-1898 which were later followed by elevator and crane insurance.

  9. Aviation Insurance (Aviation Insurance)
    In 1931, insurance companies formed The British Aviation and General Insurance Co. Ltd. and in 1935 formed The Aviation and General Insurance Co. Ltd. The establishment of the airline insurance company was motivated by the high demand for insurance in order to use aircraft for civil transportation.

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