How Old is the Insurance Industry? 6 Fast Facts

Historical records show ancient Babylonian merchants banding together around 1,750 BCE to protect goods against shipwrecks and theft.

The modern insurance industry, meanwhile, traces its roots to Hamburg and London in the 1600s.

Today, we’re exploring how old the insurance industry really is – and how it’s changed over the centuries.

1,750 BCE – Early Insurance in Ancient Babylon

The earliest recorded history of insurance dates to ancient Babylon in 1,750 BCE.

Archaeologists have discovered records showing merchants would pool money together to protect against losses linked to shipwrecks or theft, for example.

In fact, we see evidence of insurance in the famous Hammurabi Law, founded by the Babylonian king Hammurabi. Best known for his “eye for an eye” style of ruling, Hammurabi also set laws for various business dealings, including contractual terms of sale, false claims of losses, shipbuilder construction requirements, and other rules of doing business. Many of these rules resemble the modern insurance system.

Hammurabi stipulated, for example, that sea captains were required to replace a lost vessel for the owner if the vessel was operated in a negligent way – similar to modern liability laws.

Under the Code of Hammurabi, cargo ship owners were also liable for damages after collisions with passenger ships.

Ancient Chinese & Indian Insurance Systems for Maritime Traffic (3,000 BCE to 220 CE)

Around the same time as ancient Babylon, traders in ancient China and India were also engaging in an early form of insurance.

Chinese merchants needed to traverse dangerous river rapids. To protect against losses, traders would distribute goods across multiple vessels, limiting the damage caused by the loss of a single vessel.

We also have concrete evidence of insurance in ancient India: Hindu scriptures from 200 BCE (including Dharmasastra, Arthashastra, and Manusmriti) explain the concept of insurance, suggesting it was a common idea at the time. These writings discuss the idea that pooling resources today could help protect against fires, floods, epidemics, and famines in the future.

Insurance Laws in Ancient Egypt, Greece, & Rome (3,000 BCE to 400 CE)

Ancient Egypt, Greece, and Rome also had their own insurance laws and credit-based systems.

In fact, ancient Western civilizations would create the foundation that underlies the modern insurance industry:

Archaeologists discovered the work of one Roman writer (a jurist named Paulus) who attributed marine insurance to the island of Rhodes, where it originated between 1,000 and 800 BCE.

Residents of the island of Rhodes, according to the Roman writer, established the general average principle of marine insurance. That general average principle remains relevant today: it’s the idea that all stakeholders in a sea venture proportionally share any losses.

This system became known as “Rhodian Sea-Law” and was a foundational component of future Byzantine laws.

The Roman writer’s work was important enough for Joseph P Bradley, a future US Supreme Court Justice Associate, to write an article on the subject all the way back in 1851. Bradley wrote the article while employed as an actuary for Mutual Benefit Life Insurance Company (which went out of business in 2001).

Greeks and Romans were also known for creating “benevolent societies” that functioned similarly to modern health insurance companies. Members would pay a fee, and organizations would pool money. Then, they would distribute money for the funeral expenses of deceased members.

Medieval Insurance (500 CE to 1500s)

The Medieval era saw the expansion of sea trade – and the rise of credit and insurance systems along with it.

Merchants would use sea loans to protect cargo on dangerous routes. Investors would lend money to a traveling merchant, and merchants would pay back the money if the ship returned safely, creating a mix of credit and maritime insurance.

The Medieval era also saw the first official maritime insurance in Europe: Portuguese merchants set up a mutual insurance agreement system called the Bolsa de Comércio in 1293.

Genoa, known for its seafaring, expanded the insurance system in the mid-1300s by separating insurance and credit. The Genoese created specific insurance contracts along with the concept of insurance pools. In fact, the world’s first official insurance contract was signed in Genoa in 1347.

The Beginning of Modern Insurance (Mid-1600s)

We start seeing the formation of the modern insurance industry in the middle of the 17th century.

The world’s first fire insurance company was established in Hamburg in 1676. Known as Hamburger Feuerkasse (or Hamburg Fire Office), the company continues to exist today. It’s the oldest insurance company in the world. The company employs 170+ people and currently covers around 160 million EUR of property across Germany.

The Great Fire of London in 1666 accelerated the need for a modern insurance system. With a population of 350,000 people, London was the second-largest city in Europe (after Paris) and one of the largest cities in the world. The fire destroyed 13,000 homes. Within a decade, a local economist established the city’s first fire insurance company: the Insurance Office for Houses, which covered 5,000 homes across the city.

Soon after, Edward Lloyd created a coffee house in London, ultimately leading to the launch of the world’s most famous insurance company: Lloyd’s of London. Like Hamburger Feuerkasse, Lloyd’s of London continues to be a successful and thriving insurance company today.

Insurance companies also expanded products and services. They didn’t just cover fire and maritime goods; they started offering life insurance (the first life insurance policy dates to 1693), disability insurance (1848), and even nationwide health insurance (1840s).

Early Insurance in the United States (1752)

Following the Great Fire of London, modern insurance expanded across the world. It was around the same time that England was colonizing the New World, which is why we see fire insurance systems in Charleston, Philadelphia, Boston, and other colonial centers.

Benjamin Franklin helped form the first mutual insurance company in the United States in 1752. Called the Philadelphia Contributionship, the company continues to operate today as the oldest insurer in the country. Today, the company offers umbrella insurance, condo insurance, and homeowners insurance while employing 120+ people in downtown Philadelphia.

Over the next 200 years, American entrepreneurs would launch a series of other insurers, many of which have grown to become the country’s largest insurers today, including:

• The Hartford (1810)
• Vermont Mutual (1828)
• Southern Mutual (1847)
• MetLife (1868)
• Liberty Mutual (1912)
• AIG (1919)
• USAA (1922)
• State Farm (1922)
• Nationwide (1926)
• Allstate (1931)
• GEICO (1936)
• Progressive (1937)

Over the last few decades, we’ve seen insurers adapt to the internet and the proliferation of mobile devices.

After 4,000 years of being tied to human history, the insurance industry will next need to adapt to AI and drone technology as it continues to evolve.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.