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The history of insurance

yk, June 30, 2025

## From Ancient Babylon to Modern MetLife: A Brief History of Insurance

We often take insurance for granted, a safety net against the unexpected. But where did this crucial concept originate? The story of insurance stretches back millennia, evolving alongside human society and our growing understanding of risk.

While not insurance in the modern sense, the earliest forms of risk sharing can be traced to ancient civilizations. In Babylonian times, around 1750 BC, the Code of Hammurabi featured a form of loan provision. If a merchant’s goods were lost or stolen, the lender would cancel the loan, effectively distributing the risk.

Similar concepts existed in ancient Greece and Rome. Burial societies provided financial assistance to families for funeral costs, and maritime loans spread the risks of sea voyages among merchants. These early examples highlight the fundamental human desire to protect against financial hardship.

The development of formal insurance began to take shape in the 17th century. Lloyd’s of London, initially a coffee house, emerged as a hub for merchants and ship owners to pool resources and share the risk of shipping losses. This marked the birth of modern marine insurance.

The Great Fire of London in 1666 spurred the creation of fire insurance. Nicholas Barbon established the first fire insurance company, which assessed risks and provided coverage for homes and businesses.

From the 18th century onwards, insurance began to diversify. Life insurance emerged, initially targeting the wealthy. As industrialization spread, accident and health insurance gained traction, addressing the risks associated with factory work.

Today, the insurance industry is a global behemoth, encompassing a vast array of products from car and home insurance to health and travel coverage. Its history showcases a constant evolution, driven by human ingenuity and a deep-seated desire to mitigate the uncertainties of life. While the policies are more complex than Hammurabi’s code, the underlying principle remains the same: sharing risk to protect against the unexpected.

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