The history of life insurance is easy to understand. Today, life insurance is an agreement between one person and an insurance company, according to the conditions by which the insurance company must pay the insurance amount to the beneficiary (beneficiary) if the insured dies.
But where do the roots of life insurance come from? Who were the first people to realize this idea? What did they do when money didn’t have such value and didn’t bring such income as companies in the life insurance industry today? When did the life insurance industry actually begin?
The first sources of life insurance
Historians have been looking for the beginning of life insurance for a long time, they decoded the materials step by step in order to understand why they began to pay for the moment of death of the insured. According to the Financial Network Shopper in Ancient China, sailors did not allow pirates to steal all their goods, they divided the cargo into parts and distributed it to several cargo ships, so if the pirates stole the cargo of one ship, then most of the cargo will not be lost. A little later in Babylon, merchants simply gave loans that were supposed to be repaid when the goods were delivered safely. So how does this relate to life insurance? Well, both of these civilizations took steps to prevent the loss of all goods.
They took small steps that helped them in the long run. Life insurance, as we know it, originated in Rome. The people of this highly developed civilization decided to create “funeral clubs.” These clubs were designed for one single purpose, in the event of an unexpected death of a member of the club, all the rest would be ready to pay funeral expenses for him and help the breadwinner’s family with money. Life insurance, in the state in which it arose in Rome, came to an unexpected end in 450 AD, when the Roman Empire fell and its practice and experience were abandoned for a long period of time. It is important to emphasize the fact that many historians agree that at about the same time as in Rome, the Indian Empire and its citizens also formed “funeral clubs” in order to pay for the funeral and help relatives with expenses. The key to this is in the Vedas.
UK in life insurance history
Modern life insurance begins in the UK, the British decided to try it out and get it to work. Life insurance practices existed throughout continental Europe, with the exception of England.
But it was the outpost of modern life insurance that British insurance companies were, some of which are known in European countries today. It was in the middle of the 17th century, on the streets of London, groups of people decided to gather in Lloyd’s coffee shops and express their ideas about life insurance. The coffee shop was a famous place for merchants, shipowners and merchants, and therefore was an ideal place to discuss life insurance ideas, especially since most of these people had money.
US Life Insurance History
The United States decided to try out life insurance based on the experience and knowledge of the British, as this could help people in difficult situations. They decided to create their first life insurance company on the basis of the English model that was in effect at that time. The first US life insurance company was founded in the southern colony of Charleston, South Carolina in 1735. Some 20 years later, many colonies adopted the experience of Charleston.
An obstacle to the development of life insurance at that time was the fact that many religious groups opposed this, since they considered it blasphemy, to anticipate their own death, especially considering the fact with which religious zeal Christianity advanced in the North American colonies. In fact, life insurance, as we know it, arose in the United States in 1840, as religious groups calmed down and no longer interfered in government affairs. The cities of New York and Chicago became one of the main reasons for the spread of life insurance. In each of the two cities, a fire claimed a huge number of lives. After that, more and more companies turned their attention to the life insurance industry and in the 1900s their number increased significantly. People wanted to be protected in the event of death from an accident. The twentieth century is an era of growth in the life insurance industry.
The wars continued, and many people decided to insure themselves in order to provide a financial future for their families in case of their death. Strengthened them even further in this, an event of this century, when terrorists attacked the World Trade Center. People decided that protection was worth it, and that it was better to pay small fees every month than to leave a family without a livelihood.
History of life insurance in Russia
In Russia, life insurance developed very slowly and the reason for this was serfdom, which life insurance could be discussed in a “slave” state. The first insurance company was the Life Insurance Company founded in 1835, which was involved in life insurance for wealthy people. Until the revolution, in tsarist Russia, eleven companies were operating in the field of life insurance, of which three were foreign. The state also tried to dominate the industry and in 1906 a law was passed on life insurance by state savings banks.
According to the norms of which, life insurance was carried out without a medical examination for insurance amounts from 25 rubles and above. Upon the occurrence of an insured event, the term for payment of the insured amount was delayed by 5-7 years, which was unacceptable for poor citizens. And the amounts for which insurance was made were large, and inaccessible to the vast majority of citizens. And the law, conceived as a concern for the poor, has become a privilege for the rich. Until 1919, life insurance covered only 0.25% of the country’s population. In 1919, life insurance was canceled and all previously concluded contracts were canceled. Insurance received a new impetus only in the 1920s, in a new economic policy.
In 1921 Gosstrakh was established – the Main Directorate of State Insurance. Those. life insurance was not only completely monopolized by the state. Gosstrakh granted the right to voluntary life insurance and accident insurance. Until the 1960s, life insurance in the Soviet Union developed controversially. And only in 1960 did the promotion of life insurance begin, new programs were developed and introduced. As a result, by 1990, more than 85 million life insurance contracts had been concluded. And only after the adoption of the Insurance Law in 1992, there was a demonopolization of insurance and the State Insurance Committee was transformed. Private companies began to appear in the life insurance industry.
Life insurance today
As you can see, life insurance has changed a lot since it first appeared in Rome and India. Large companies around the world are developing in cooperation with the state in which they are located. As you can see, the market is booming now and a lot of companies have come into the sphere of life insurance. No one knows what will happen in the future, but at the moment the insured must be satisfied that he has the opportunity to choose from dozens of insurance companies.