1.1.5 The emergence of the insurance industry
The history of insurance can be traced back as far as Roman times and the existence of Roman collegia – groups of priests, artisans or neighbours held together by religion and common aims. One of the latter was ‘providing a fitting burial for the members’ (Jack, 1912). In return, the members would, from time to time, make a payment or donation to the collegia (or guilds, as they later became). This need arose from a desire to protect one’s family in the event of an early or untimely death, and as society moved away from a tribal to a family structure, the desire and perceived need for insurance grew.
Near the end of the seventeenth century, Daniel Defoe wrote ‘insuring of life I cannot admire, I shall nothing to it but that in Italy, where stabbing and poisoning is so much in vogue, something may be said for it’ (Defoe, 1969 [1697]). Despite Defoe’s misgivings, it was the countries with the lowest early death rates, such as England, where insurance grew up and became popular earliest. So whereas forms of insurance have their roots in Roman times, insurance only started to become widespread from the late eighteenth century onwards (Cockerell and Green, 1994).
The insurance business in the UK has developed from these early beginnings to be the largest insurance industry in Europe and the second largest in the world, employing over 320,000 people in the UK alone (ABI, 2013).
The development of the business has been complex and interwoven with social changes and historical events and, because of the diverse nature of insurance, has developed in different ways depending on the ‘line’ (type) of insurance. For example, the history of motor insurance is much more recent than that of other types of insurance because the car was not invented until the late nineteenth century. To show this, you will explore the development of three different lines of insurance:
- marine insurance
- fire insurance
- life assurance (in the UK, the insurance of a life is known as life assurance).
Before this, however, you will briefly explore the purpose of insurance and distinguish between the two main groupings of insurance: long-term and general (also known as annual) insurance.