The earliest forms of recorded insurance date back around 4,000 years ago, to Babylonian Empire. Ship owners who took out a loan on their cargo would repay the loan with an additional amount based on the assumption that if the ship was wrecked and the cargo lost, the loan would be cancelled. For the loan giver, the number of successfully received loans with additional payments would mitigate against any lost loans. This later developed into more modern forms of insurance, with lenders needing to calculate different levels of risk, and charging different premiums for different routes and different cargos. This system was later expanded by the Ancient Greeks and Romans, who would charge different premiums based on the time of year, as well as the danger of the route.

It was in the seventeenth and eighteenth century that insurance expanded to take on many of its modern forms. The rise of international trade and the growth of the British and other European Empires meant that maritime insurance was becoming increasingly common. Also rising in popularity was life insurance, which was designed to payout to the family of the deceased if he or she were to be killed. With the opening of Lloyd’s Coffee House in London in the late seventeenth century, many insurance deals were brokered over a cup of coffee, and the coffee house later become Lloyd’s of London, one of the world’s most famous insurance companies.

In the early twentieth century, the State became involved in the issue of insurance, offering Old Age Pensions, National Insurance and other forms of compensation for losses. The Welfare State of the mid-twentieth century effectively operates as a form of insurance, with individuals paying a tax that is recouped during times of hardship or illness. Insurance has therefore become part of the everyday fabric of society, with almost every person in the developed world holding at least one form of insurance.

In the new millennium, four thousand years after the development of insurance, there is a wide range of different types of cover. Insurance now can cover almost every aspect of your life, from your car, to your health cover, to the types of taxation mentioned above. The system has come a long way since the idea of maritime loans, although at its heart, the purpose of insurance is to pay a small amount during the good times to cover the less fortunate times. The central idea has changed little in the four millennia of insurance.

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