The concept has evolved drastically over time, but the history of insurance can be traced back thousands of years. For early humans, risk management took the form of safety in numbers – living and hunting in groups to spread out the risk posed by predators and starvation. Later, community members helped one another rebuild shelter in times of loss and stored surplus food to safeguard against famine. Today, insurance covers just about everything, including space satellites and the threat of cyberattacks.
“No financial transaction could happen without insurance,” says Thom Rickert, vice president and emerging risk specialist. “Who would take the risk of moving cargo from here to there without some assurance that they would not face financial ruin if the cargo was lost? Who would loan money on a home or business? The concept of risk sharing has been around for millennia. It’s the reason insurance exists.”
Insurance started on the seas
All sorts of insurance coverage are available today, but marine insurance is broadly acknowledged as the earliest known form. As early as 5,000 years ago, Chinese merchants were hedging against shipping losses by spreading cargo among multiple ships. Babylonian ship merchants took out loans on shipments and paid a “loan forgiveness” fee to lenders in case of loss or theft at sea. This form of insurance law was recorded in the Code of Hammurabi, a list of several hundred laws promulgated by the Babylonian ruler of the same name during his reign from 1792 B.C. to 1750 B.C.