How Insurance Business Evolved Over Time | Learn The Real Facts

In a time of anguish like the present, it is an interesting exercise to go back and know how the insurance business evolved. Over the years, insurance has developed rapidly into a modern business that protects people from diverse risks. Moreover, the business has been profitable for many years now. Thus, we have highlighted the major points regarding its evolution over time. Let’s learn how insurance business evolved over time. Come along!

How Insurance Business Evolved Over Time

How Insurance Business Evolved Over Time

Many things about insurance have changed over time, from how it’s bought to how it is sold. While consumers are more informed and sophisticated than ever, digital technology has brought them closer to lenders and other financial services companies in a way that was never possible before.

Here we look at how consumer behavior has influenced the evolution of several key insurance business areas over the last five years or so.

These changes will continue to impact businesses, trade associations, and policy-makers to engage with customers through social media while maintaining traditional customer service levels. In particular, using social media presents great opportunities for increased awareness about products and increased growth potential for firms.

Insurance business since the Beginning of Time

How Insurance Business Evolved Over Time

It could be said that insurance has existed since man has existed. It seems like an exaggeration, but the reality is that the first glimpses of insurance date back to the Ancient Ages when men and women lived in small communities and jointly faced each other’s problems in activities such as hunting or foraging.

That was a nascent form of insurance. More concretely, we see it in the age of advanced civilizations such as the Greek, the Roman, or the Babylonian. Specifically, 5,000 years ago, the Babylonian merchants already used insurance: among all the group members, they assumed the loss of merchandise of any of them in their continuous travels. It was an attempt to cover their collective and individual interests.

A little later, around 2250 BC, this practice became common and legal as part of the Hammurabi Code. It was a process based on group solidarity. Like current insurance, it covers any unforeseen risk. The group helped restore everything from a dead animal to a tool or anything necessary for life at that time. There was even a compensation system for the wife in the event of the death of the spouse. Similar practices were used in ancient Greece, especially in Rhodes, for trade by sea. In this case, the interest was very high.

Insurance business in the middle ages

The Middle Ages represent a level leap in the history of the insurance business. It was a time of flourishing commerce. Thus, life and travel insurance were born. Interestingly, the pirates were the culprits. They used to capture ships that made the trade route and asked for ransom to guarantee the lives of the hostages. 

This arises the antecedent to current life insurance since it took charge of the rescue and safeguarded the crew’s lives. It also covered death from illness or shipwreck. Later, it secured the ship and cargo. As early as the 9th century, the guilds somehow insured their members in the territories of present-day Germany, France or England.

Insurance business in our modern world

The next leap means the arrival of modern insurance as a business. It arose after the great fire of London destroyed thousands of houses in 1666. This further became the germ of another advance in the history of the modern insurance business. This also birthed fire insurance and the first general insurance company. 

Here, each had its fire department and provided a metal sheet stating the insured status of every insured client. This new step in the development of insurance introduced new features. Now a bank guaranteed the agreement and made the annual interest of the contracted guarantee proportional to the value of the insured property.

In the 18th century, the calculation of risks and probabilities began to be considered key in insurance, probably because the theories of scientists like Galileo were becoming popular. 

The Equitable Life Assurance Society was born, the first company that based its activity on scientific calculations to set premiums and possible indemnities. At the beginning of the 19th century, the first insurance company started operations in Toulouse.

Since then, insurance has continuously evolved, demonstrating a great capacity to adapt to new emerging needs, but based on the same foundations that our predecessors already showed centuries ago. And in this current situation, once again, insurance appears as a basic axis of the social structure and as a sector always committed to society.

Furthermore, the most profound change in the insurance industry in recent years has been driven by the growth of the Internet. Insurance buyers are gradually going online to buy, and insurers have changed much of their selling and underwriting practices. Global access to the Internet has also led to new mergers between financial services companies competing in an increasingly global market.

Types of Insurance Business in the Middle Ages

How Insurance Business Evolved Over Time

In the middle ages, the insurance business began to evolve with the creation of diverse types. These include:

Marine insurance

The concept of early marine insurance had to do mainly with maritime risk. This type of insurance is very ancient: perhaps it was born on the island of Rhodes around the 9th century BC. For many centuries the Rhodian maritime law dominated the Mediterranean and was later accepted by Rome: the Lex Rhodia de Jactu.

Those laws reached the middle Ages. At that time, the owners of ships were integrated into the ship’s crew and were also owners of the cargo, so the risk they ran was maximum. Due to this, the idea of mutually insuring each other, sharing damage due to shipwrecks, storms, or pirate collisions arose.

On the other hand, it was necessary to ensure the loans acquired to start a commercial adventure never incurred huge losses. In Latin, this type of insurance was called Nauticus fetus or thick contract, the purpose of which was to anticipate amounts on goods and merchandise exposed to the dangers of navigation.

So if the cargo arrived safely at the port of destination, the debtor would reimburse the capital loaned with the amount agreed as the price of risk coverage.

And if the insured assets deteriorate or perish on the way, the creditor only claimed the part of the loan covered with the value of said effects.

This contract, similar to the insurance policy, was a public deed. Without it, the maritime risk of the commercial company will still be increasing rapidly.

Property insurance

This entails insured goods and merchandise such as spices, clothes, and jewelry. Then, a loan was usually made on a commercial operation while leaving the funds in the power of a third party. This person usually acted as a banker and guaranteed the business and the bona fides of the insurance operator.

A similar practice was found in India in the 7th century BC, in China and Egypt, and later inherited by Greece and Rome.

As for the phrase “thick loan”, it arose at the end of the Middle Ages about the fact that contracts of this nature or title of the guarantee deposit usually come in large print, different from the small print used in the drafting of the remuneration conditions and risk clauses that today we call the fine print.

This type of insurance was typical of large business owners, as it gradually became increasingly sophisticated with time.

Life insurance

A kind of life insurance already existed at the time of the Roman Empire that was designed to cover the death of the soldiers of the legions and the expenses of the deceased’s family.

Already in the fourteenth century, there is evidence of mixed merchandise and life insurance. For example, that covered boat trips from diverse parts of the world. Here, the lives of the slaves being transported were considered as merchandise and thus insured.

In 1453 a pregnant slave was insured in America, and there are also insurance cases for hands and feet, eyes, and even the voice. This has grown to be very popular among music stars today.

Merchandise insurance

No one would have risked insuring goods overland. Whoever charged such high prices made this option quite expensive for many people. Here, an implicit toll fee was charged by the feudal nobility. This also covered the payment of transit rights through manorial territories and the defense of the merchant or traveler. In the end, they were usually compensated in case of losses due to accidents or assault.

On the other hand, faith in divine protection made any prevention or precaution in that sense frowned upon. Moreover, it denoted distrust in the existence of divine help: canon law used to hinder the practice of insurance.

It also happened in the Muslim sphere, where even in the 20th century. It was forbidden to take out insurance policies, at least in places like Lebanon.

Frequently Asked Questions

When was the first legal insurance contract introduced?

The first known legal insurance contract began in Genoa in 1347. In the next century, the enhancement of maritime insurance started through diverse premiums.

Who is the father of insurance education?

Solomon Huebner is known as the “father of insurance education”. This is quite valid, as he taught the first course ever in the field of insurance. He also made the first insurance department and became the inventor of the modern-day industry of financial services.

Who established the first insurance company in America?

Benjamin Franklin established the first insurance company in America in 1752. This was known as the Philadelphia Contributionship. 

Who started the first marine insurance?

The first marine insurance was initiated by a coffee grower known as Edward Lloyd. He made this possible by establishing a firm known as Lloyd’s Coffee House. This grew into a meeting place for people in the shipping field who wished to insure their ships and cargoes. 


In conclusion, insurance comes with diverse benefits. And if you desire to learn how the insurance business has evolved, the highlight above will aid you immensely.


Adam Grabois is an expert in all aspects of Insurance and Property with 20 years of experience. He is a licensed broker of all lines including property, casualty, life, and health. As a licensed adjuster, he is well-versed in all aspects of insurance, and he owns All Needs Insurance agency in Florida.

He attended Tufts University where he earned his undergraduate degree, followed by a Master's degree from Columbia University.

Adam shares his breadth of experience by helping many businesses and individuals manage risk and protect themselves financially. He now shares this with the audience of the "Pro Insurance Info" website.

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