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History of insurance
The history of insurance traces the development of the modern business of insurance against risks, especially regarding cargo, property, death, automobile accidents, and medical treatment.
The insurance industry helps to eliminate risks (as when fire-insurance providers demand the implementation of safe practices and the installation of hydrants), spreads risks from individuals to the larger community, and provides an important source of long-term finance for both the public and private sectors.
In December 1901 and January 1902, at the direction of archaeologist Jacques de Morgan, Father Jean-Vincent Scheil, OP found a 2.25 meter (or 88.5 inch) tall basalt or diorite stele in three pieces inscribed with 4,130 lines of cuneiform law dictated by Hammurabi (c. 1792–1750 BCE) of the First Babylonian Empire in the city of Shush, Iran. Code of Hammurabi Law 100 stipulated repayment by a debtor of a loan to a creditor on a schedule with a maturity date specified in written contractual terms. Laws 101 and 102 stipulated that a shipping agent, factor, or ship charterer was only required to repay the principal of a loan to their creditor in the event of a net income loss or a total loss due to an Act of God. Law 103 stipulated that an agent, factor, or charterer was by force majeure relieved of their liability for an entire loan in the event that the agent, factor, or charterer was the victim of theft during the term of their charterparty upon provision of an affidavit of the theft to their creditor.
Code of Hammurabi Law 104 stipulated that a carrier (agents, factors, or charterers) issue a waybill and invoice for a contract of carriage to a consignee outlining contractual terms for sales, commissions, and laytime and receive a bill of parcel and lien authorizing consignment from the consignee. Law 105 stipulated that claims for losses filed by agents, factors, and charterers without receipts were without standing. Law 126 stipulated that filing a false claim of a loss was punishable by law. Law 235 stipulated that a shipbuilder was liable within one year of construction for the replacement of an unseaworthy vessel to the ship-owner that was lost during the term of a charterparty. Laws 236 and 237 stipulated that a sea captain, ship-manager, or charterer was liable for the replacement of a lost vessel and cargo to the shipowner and consignees respectively that was negligently operated during the term of a charterparty. Law 238 stipulated that a captain, manager, or charterer that saved a ship from total loss was only required to pay one-half the value of the ship to the shipowner. Law 240 stipulated that the owner of a cargo ship that destroyed a passenger ship in a collision was liable for replacement of the passenger ship and any cargo it held upon provision of an affidavit of the collision by the owner of the passenger ship.
In 1816, an archeological excavation in Minya, Egypt (under an Eyalet of the Ottoman Empire) produced a Nerva–Antonine dynasty-era tablet from the ruins of the Temple of Antinous in Antinoöpolis, Aegyptus that prescribed the rules and membership dues of a burial society collegium established in Lanuvium, Italia in approximately 133 AD during the reign of Hadrian (117–138) of the Roman Empire. In 1851, future U.S. Supreme Court Associate Justice Joseph P. Bradley (1870–1892), once employed as an actuary for the Mutual Benefit Life Insurance Company, submitted an article to the Journal of the Institute of Actuaries detailing an historical account of a Severan dynasty-era life table compiled by the Roman jurist Ulpian in approximately 220 CE during the reign of Elagabalus (218–222) that was included in the second volume of the codification of laws ordered by Justinian I (527–565) of the Eastern Roman Empire, the Digesta seu Pandectae (533).
Additionally, the Digesta included a legal opinion written by the Roman jurist Paulus at the beginning of the Crisis of the Third Century in 235 CE on the Lex Rhodia ("Rhodian law") that articulates the general average principle of marine insurance established on the island of Rhodes in approximately 1000 to 800 BCE as a member of the Doric Hexapolis, plausibly by the Phoenicians during the proposed Dorian invasion and emergence of the purported Sea Peoples during the Greek Dark Ages (c. 1100–c. 750) that led to the proliferation of the Doric Greek dialect. The law of general average constitutes the fundamental principle that underlies all insurance.
Insurance in some forms dates back to prehistory. Initially, people sold goods in their own villages or gathering places.[citation needed] However, with the passage of time, they turned to nearby villages to sell. Two types of economies existed in human societies:[citation needed] natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and monetary economies (with markets, currency, financial instruments and so on). Insurance in non-monetary economies entails agreements of mutual aid. Such economies can potentially foster institutions such as co-operatives, guilds and proto-states - institutions functioning to provide mutual protection and to encourage mutual survival in adverse circumstances. The "pay-off" for such "insurance" need not involve financial transactions. If one family's house gets destroyed, the neighbors are committed to helping rebuild it. Public granaries embodied another early form of insurance to indemnify against famines.
Babylonian, Chinese, and Indian traders practiced methods of transferring or distributing risk in a monetary economy in the 3rd and 2nd millennia BCE, respectively. Chinese merchants traversing treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system recorded in the famous Code of Hammurabi, c. 1750 BCE, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea. Concepts of insurance has been also found in 3rd century BCE Hindu scriptures such as Dharmasastra, Arthashastra and Manusmriti.
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History of insurance
The history of insurance traces the development of the modern business of insurance against risks, especially regarding cargo, property, death, automobile accidents, and medical treatment.
The insurance industry helps to eliminate risks (as when fire-insurance providers demand the implementation of safe practices and the installation of hydrants), spreads risks from individuals to the larger community, and provides an important source of long-term finance for both the public and private sectors.
In December 1901 and January 1902, at the direction of archaeologist Jacques de Morgan, Father Jean-Vincent Scheil, OP found a 2.25 meter (or 88.5 inch) tall basalt or diorite stele in three pieces inscribed with 4,130 lines of cuneiform law dictated by Hammurabi (c. 1792–1750 BCE) of the First Babylonian Empire in the city of Shush, Iran. Code of Hammurabi Law 100 stipulated repayment by a debtor of a loan to a creditor on a schedule with a maturity date specified in written contractual terms. Laws 101 and 102 stipulated that a shipping agent, factor, or ship charterer was only required to repay the principal of a loan to their creditor in the event of a net income loss or a total loss due to an Act of God. Law 103 stipulated that an agent, factor, or charterer was by force majeure relieved of their liability for an entire loan in the event that the agent, factor, or charterer was the victim of theft during the term of their charterparty upon provision of an affidavit of the theft to their creditor.
Code of Hammurabi Law 104 stipulated that a carrier (agents, factors, or charterers) issue a waybill and invoice for a contract of carriage to a consignee outlining contractual terms for sales, commissions, and laytime and receive a bill of parcel and lien authorizing consignment from the consignee. Law 105 stipulated that claims for losses filed by agents, factors, and charterers without receipts were without standing. Law 126 stipulated that filing a false claim of a loss was punishable by law. Law 235 stipulated that a shipbuilder was liable within one year of construction for the replacement of an unseaworthy vessel to the ship-owner that was lost during the term of a charterparty. Laws 236 and 237 stipulated that a sea captain, ship-manager, or charterer was liable for the replacement of a lost vessel and cargo to the shipowner and consignees respectively that was negligently operated during the term of a charterparty. Law 238 stipulated that a captain, manager, or charterer that saved a ship from total loss was only required to pay one-half the value of the ship to the shipowner. Law 240 stipulated that the owner of a cargo ship that destroyed a passenger ship in a collision was liable for replacement of the passenger ship and any cargo it held upon provision of an affidavit of the collision by the owner of the passenger ship.
In 1816, an archeological excavation in Minya, Egypt (under an Eyalet of the Ottoman Empire) produced a Nerva–Antonine dynasty-era tablet from the ruins of the Temple of Antinous in Antinoöpolis, Aegyptus that prescribed the rules and membership dues of a burial society collegium established in Lanuvium, Italia in approximately 133 AD during the reign of Hadrian (117–138) of the Roman Empire. In 1851, future U.S. Supreme Court Associate Justice Joseph P. Bradley (1870–1892), once employed as an actuary for the Mutual Benefit Life Insurance Company, submitted an article to the Journal of the Institute of Actuaries detailing an historical account of a Severan dynasty-era life table compiled by the Roman jurist Ulpian in approximately 220 CE during the reign of Elagabalus (218–222) that was included in the second volume of the codification of laws ordered by Justinian I (527–565) of the Eastern Roman Empire, the Digesta seu Pandectae (533).
Additionally, the Digesta included a legal opinion written by the Roman jurist Paulus at the beginning of the Crisis of the Third Century in 235 CE on the Lex Rhodia ("Rhodian law") that articulates the general average principle of marine insurance established on the island of Rhodes in approximately 1000 to 800 BCE as a member of the Doric Hexapolis, plausibly by the Phoenicians during the proposed Dorian invasion and emergence of the purported Sea Peoples during the Greek Dark Ages (c. 1100–c. 750) that led to the proliferation of the Doric Greek dialect. The law of general average constitutes the fundamental principle that underlies all insurance.
Insurance in some forms dates back to prehistory. Initially, people sold goods in their own villages or gathering places.[citation needed] However, with the passage of time, they turned to nearby villages to sell. Two types of economies existed in human societies:[citation needed] natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and monetary economies (with markets, currency, financial instruments and so on). Insurance in non-monetary economies entails agreements of mutual aid. Such economies can potentially foster institutions such as co-operatives, guilds and proto-states - institutions functioning to provide mutual protection and to encourage mutual survival in adverse circumstances. The "pay-off" for such "insurance" need not involve financial transactions. If one family's house gets destroyed, the neighbors are committed to helping rebuild it. Public granaries embodied another early form of insurance to indemnify against famines.
Babylonian, Chinese, and Indian traders practiced methods of transferring or distributing risk in a monetary economy in the 3rd and 2nd millennia BCE, respectively. Chinese merchants traversing treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system recorded in the famous Code of Hammurabi, c. 1750 BCE, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea. Concepts of insurance has been also found in 3rd century BCE Hindu scriptures such as Dharmasastra, Arthashastra and Manusmriti.