Welcome back to this fascinating series exploring the history of insurance…
To briefly recap, in the previous article we discovered that many phrases we are still aware of today within marine insurance such as General Average and indeed the very concept of Maritime Loans were created by the ancient Greek civilisation nearly two and a half millennia ago.

As with so much of the Greek culture these concepts of early insurance were integrated and absorbed into Roman culture which followed. It was under the influence of the arguably more economically aware Romans that these concepts began to become more progressively monetised and more in keeping with our understanding of modern insurance.

However one area of insurance that was to last throughout the ages clearly originated solely as a Roman concept – this was in fact Life Insurance.

The popularisation of Roman ‘Burial Clubs’ was indeed the very first format for life insurance and holds many of the core principals that we now include within a modern Life Insurance policy.

The Burial Clubs arose out of a commonly held Roman belief that unless a man was buried correctly his spirit would remain troubled. The troubled spirit would be unable to pass into the next world and instead would remain locked to this existence becoming a particularly miserable ghost – something that most of us would like to avoid if at all possible.

So the superstitions and religious views of the times made it pretty damned important the Romans to make sure that when they did head off to Elysium, that they had a decent send off. Whilst this is all well and good for those in power and with wealth, for your average Legionnaire trying to carve out an honest living, this could of course could be a bit of a worry.

And so the ‘Burial Club’ was born.

These groups, originally consisted primarily of soldiers but eventually grew to incorporate all levels of Roman society. The simple premise was that the group required members to regularly donate to a common fund, which was then used in the event of a members death to fund the funeral. As the popularity of these clubs grew so did their complexities, ultimately resulting in not only payment for pre agreed funeral arrangements but also an inclusion of an additional stipend to provide for the surviving members of the immediate family of the deceased.

It is interesting to note that during this period of Rome’s history groups which encouraged the proletariat to come together either economically or politically were generally outlawed by the government. The thinking was that the meetings themselves could become dangerous incubators for rebellious individuals, who may in turn rise up and threaten the current status quo.

However, not only were Burial Clubs accepted, they were actively encouraged by the government and military. Such was the strength of conviction that it was absolutely essential for each member of the community, regardless of their standing in society, be buried in the correct manner.

So while none of the major life insurers are basing their sales pitch around ‘you better pay your premium otherwise you’ll end up a miserable ghost for eternity’, the fundamental ideals of the Roman Burial club, which are well over two thousand years old, are likely to seem reasonably familiar to any of us with a a life insurance policy today.

Through modern life insurance, we still steadfastly hold to the principle that by aggregating the financial power of many, we can provide support for those in need which would simply not be available otherwise. It was this simple principal that led to the development of the ancient Roman Burial Clubs and indeed the fact that this underlying ethos remains unchanged is the heart of modern Life insurance also.
In the next instalment of this series we shall return to the seas as we discuss the invention of separate insurance contracts in Genoa in the 14th Century.

Related posts:

1. A Brief History of Insurance: Part 2 Early Marine Insurance
2. A Brief History of Insurance: Part 1 The Ancient World
3. Euro On The Point Of Collapse – Victim Of A Trojan Horse?

Part Two: Rhodian General Average and Athenan Maritime Loans:

OK, so in the first article in this series we discovered that whilst those amazing Chinese chaps were out inventing everything and anything, they put together the worlds first ever risk management systems. We also discovered that it was a thousand years or so later that a rather brilliant Babylonian, a first dynasty king called Hammurabi came up with something that many scholars consider to be the first recorded form of monetised insurance.

This system was in fact set to become incredibly wide spread largely down to the Babylonian’s sphere of influence within the young, growing markets of commerce within early history.  The practice of paying what we would now consider an insurance premium, to cover the cost of a merchant’s cargo should it be lossed due to theft or accident on the high seas, had become common place across the mediteranean in its many fledgling cultures.

As the cultures of the meditaranean developed and in particular that of Ancient Greece, so we see further complexities within insurance as a financial product within these cultures and also their growing importance within the daily lives of members of these societies.

The inhabitants of Rhodes were to establish a rule of general average amongst their merchants and traders. In essence this was very much in the same vein as a general mutual insurance fund, a term many of us are more familiar with. This general average was created to allow groups of merchants to pay to insure their goods which were to be shipped together.  Under this very community minded statute, should a merchant be unfortunate enough to have his goods jettisoned due to reasons of sinkage or storm, then each of the merchants whose cargo was also on the journey would share the cost of this loss  by paying a premium. Of course the term and principals of  general average are still applicable in many modern marine insurance policies today.

It was during this period in history that the concepts of insurance and risk management really began to beccome more refined and complexities within risk calculations started to emerge.  And it all started with boat insurance.

The ancient Athenians created what was termed a maritime loan. This loan provided advanced money for voyages and repayment  was cancelled if the ship was lost at sea, much like the laws in the older Codes of Hammurabi and indeed the maritime loans of modern times. It was circa the fourth century that the rates of interest for loans differed accordingly to the relative ease or danger of the passage. The time of the year, the prevalent weather conditions, the route to be taken, even the socio politcal enviroment were all taken into account, which would suggest a level of intuitve pricing for risk begining to very much resemble modern day insurance.

As with so many elements of modern society, we  see that what began in Mesoptamia, was once again absorbed and developed by the Greeks, and as is true with many other facets to civilisation, was so then absorbed and further explored within the Graeco-Roman and then Roman cultures. Insurance was to be no different and as other lines of insurance developed in our modern era out of marine insurance so it was to be the case in the ancient empires of Greece and Rome.

In the next installement we shall explore this further as we discover how the Greeks and Romans introduced the concepts of Health  Insurance and Life insurance to their civilisations.

Related posts:

1. A Brief History of Insurance: Part 1 The Ancient World
2. Transport, Marine Insurance and Marine Cargo Insurance
3. Marine Insurance Counts the Cost of Increased Attacks by Pirates!

Part One: Insurance in the ancient world:

Insurance is everywhere and attached to everything we do. In the western world practically each and everyone of us is involved with a number of seperate insurance policies everyday and everywhere we go. Whether it be in our cars, in our homes or in our jobs we will no doubt be insured somehow at any given moment. But where did this concept originate and how has it developed over the years to the modern sophisticated system that it is today?

Well, the history of insurance steps back a lot further back than many of us would ever imagine. In fact,  throughout history wherever there has been any form of commerce and an economy in place, insurance of some description soon followed.

The earliest recorded descriptions of insurance date back over five thousand years to the third millenia BC, with the Chinese empire having established insurance methods in place. Of course, having invented, paper money, fireworks, and alcohol it was probably best that these clever chinese chaps came up with insurance too! With a thriving and thoroughly well established trade network developed, the creation of a system of insurance was driven by neccesity. Chinese merchants were incredibly tenacious and would make incredible journeys, often overcoming treachourous terrain and dangerous river rapids to complete their journey. It became standard practice for these merchants to redistribute their valuable wares across a number of vessels to limit the loss of any one vehicle capsizing. Essentially, risk management in its purest, most simplisitic form.

As we fast fowrard a millenia or so we encounter another bunch of rather clever folks who were off having a great old civilised time, whilst we in Britain were tentatively stepping out of caves,  the Babylonians. This Mesopotamian civilisation flourished amongst both the Sumerian and Akkadian peoples and again was a sophisticated and complex society with commerce beating at its heart. This was a civilisation with an incredibly well organised government, an established, functioning bureaucracy, and complex taxation systems, much of which was installed by the sixth king of Babylon, Hammurabi.

Having brought stability to the Mesopotamian region, it was Hammurabi who introduced the groundbreaking (yet slightly unimigantively and rather egotistically named) Codes of Hammurabi; one of the first ever recorded codes of law. It was in fact from the Codes of Hammurabi that the phrase “an eye for an eye a tooth from a tooth” originated. The Code also contains the first written reference to insurance within a legal setting, outlining the insurance systems that the Babylonians had in place.

It was a common practice for merchants to take a loan from a more wealthy merchant or nobleman to fund their shipments and often when taking the loan the merchant would make an additioanl payment in exchange for the lender’s guarantee that should the shipment be lost or stolen then the loan would be canceled. Within the Codes of Hammurabi, it became law that in such a situation the merchant would have to declare in court (and before God) their losses and then the state would reimburse them.

This Babylonian law is often acknowledged as the very first true emergence of insurance and commercial insurance as we understand it today and in fact it spread out amongst most of the early sea faring merchants of the meditaranean, establishing itself among numerous communities as an integral element of a merchants rights.

In the next installement of this series we shall explore further into how insurance in the meditaranean further developed under the classic culture of the ancient Greeks. Ultimately establishing both Athenian maritime loans and the Rhodian sea law of general average as the first example of boat insurance.

Related posts:

1. The Cost of Insuring The FIFA World Cup

Mass Devaluation.

Cheap Holidays in the Sun!

Suddenly Europe will not be worth half as much as it was!

Worse still for the Euro Bankers is the fact that the amount of Greek debt appears unquantifiable due to some smart bookeeping by the previous conservative government who were incumbent for most of the credit crunch and the subsequent recession.

This is not going to impress those financial entrepreneurial illuminati who have their money tied up in the Euro and itchy fingers on the sale button!

Europe is supposed to be growing itself out of recession faster than the UK or USA.
Some say that this is a mirage and was a temporary bounce due to the Eurobankers encouraging consumer spending coupled with the christmas seasonal factor.
The overall trends appear to be down!

If the Euro collapses on the money markets, all participants will pay the price of the Greek tradegy.

I can already hear the British Euroskeptics say ‘I Told You So!’ as the Irish economy collapses.

So what will it mean for the UK and in particular the UK Insurance Industry?

Well Insurance Blogger thinks it could be a very good thing for the UK financial services industries as a whole.

After all when the Money markets sense a tsunami coming; the smart money always runs to the safest shores!

Of course the right wing euro-sceptics will claim victory in the advent of a Cameron led election victory; but the real praise must go to Gordon Brown and Barack Obama for not following the Euro pump priming recovery route.

Related posts:

1. Insurance Companies buy more UK Government Debt