How did the insurance industry get started, anyway?
Modern insurance was formalized in the 1300s to protect sea vessels and their shipments. In 1925, Connecticut became the first state to offer auto insurance.
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Written by
Mathew B. Sims
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Reviewed by
Daniel Walker
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UPDATED: Jul 16, 2021
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- You can conduct all of your business without ever coming face to face with an auto insurance agent, much less the other people who are insured by the same company
- These days, the auto insurance industry is as high tech and cutting edge as any other industry. Online insurance quotes are just a couple clicks of the mouse away
- You can file a claim online, or follow the status of a claim
These days, the auto insurance industry is as high tech and cutting edge as any other industry. Online insurance quotes are just a couple clicks of the mouse away.
You can conduct all of your business without ever coming face to face with an auto insurance agent, much less the other people who are insured by the same company.
But the insurance business wasn’t always that way. Type your ZIP code in on this page and get free auto insurance quotes today!
Table of Contents
History of Insurance
Insurance has its roots in China, dating way back to the 2nd millennium BC. Chinese merchants often had to transport their goods over dangerous river ways.
To ensure that no one lost all of his goods, several merchants would band together and share cargoes, so that each merchant had some cargo on each boat.
That way, even if a merchant lost his boat, he would only lose a small percentage of his wares (and everyone else’s).
The Ancient Babylonians didn’t have auto insurance companies, but they were the first ones known to have official written insurance agreements.
Ship captains would pay money for a form of pirate insurance, which guaranteed that their shipments would be paid for if they were stolen.
Apparently, the Pirates of the Caribbean had nothing on the Pirates of the Mediterranean.
These early agreements laid the philosophical foundation of shared risk which eventually evolved into the insurance industry we have today.
Then, as now, the basic concepts of insurance were: Everyone paid a modest fee to protect themselves against loss.
If a protected person or company suffered loss, they would recoup their losses from the insurer.
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History of Modern Insurance
Insurance in a more modern form was born in Genoa, Italy in the 1300s.
The insurance still mainly involved insuring merchants and their vessels and cargo, but the dealings were more formalized and written down in contract form.
The Great Fire of London is likely what started the idea of homeowner’s insurance. Following the fire in 1666, companies in London started offering insurance for homes against fire.
As for insurance in the United States, it was none other than the eminent Benjamin Franklin who introduced the concept, forming a mutual benefit society which protected its members against loss by fire.
While you couldn’t get online auto insurance quotes from his Philadelphia Contributorship, you could obtain policies through Mr. Franklin or one of the other society’s members.
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is an industry of it own. You can file a claim online, or follow the status of a claim. Drivers drive competition by getting annual quotes and discounts from other providers.
Cheap car insurance, specialty auto insurance, and coverage for high-risk drivers are all sub-specialties of this booming industry.
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