The Beginning and History of Insurance

For ages, the inner workings of insurance have been mystified the multitudes. Questions abound about how the industry evolved over time to become a colossal force in contemporary society. Everyone comprehends the valuable peace of mind that adequate loss protection affords. Few, however, comprehend the relative simplicity underlying what has grown to become a driving financial force in contemporary society.

Humans have always been relatively risk-averse. Its underlying essence of seeking to reduce risk by spreading it around is as old as mankind. From group elk-hunting expeditions to duelists seeking assurance against fatal goring to fear merchants’ fears of marauding tribal thieves making off with their entire cargo, people have sought loss protection since time immemorial.

As far back as 3000 BC, Chinese merchants redistributed goods among multiple ships during lengthy trans-oceanic voyages. This minimized potential loss from capsizing of any given vessel.

Likewise, the famous Hammurabi Code of 1750 BC revealed a similar practice of loss protection among Mediterranean shipping merchants. If a merchant borrowed money to finance a shipment, an additional sum was due in exchange for the lender’s loan cancellation agreement in event of cargo theft. Inscribed alongside the royal seal, these written arrangements are the oldest-known insurance policies.

During the Achaemenid Empire reign from 550 to 330 BC, Persian monarchs insured their subjects by requiring official registrations through public notaries. The process became so culturally entrenched as to constitute an annual tradition.

At the commencement of each Iranian New Year, ethnic leaders and other willing participants presented the king with gifts during an elaborate ceremony that was held to commemorate the event. Special registrations were required for gifts valued in excess of 10,000 Derrik.

Registration was highly beneficial to the gift giver, as it insured assistance from the king and the Royal Court if the donor found himself in subsequent trouble. For instance, such bequeaths went a long way toward facilitating proposed construction projects, gaining official permission for feasts, or obtaining marriage licenses for one’s children.

If registration archives revealed a prior gift from the petitioner in excess of 10,000 Derrik, he or she would receive double this amount.