The direct insurance of sea-risks for a premium paid independently of loans began in Belgium about 1300 AD. Loans of this character have ever since been common in maritime lands under the name of bottomry and respondentia bonds. However, the money would not be repaid at all if the ship were lost, thus making the rate of interest high enough to pay for not only for the use of the capital but also for the risk of losing it (fully described by Demosthenes).
Money was advanced on a ship or cargo, to be repaid with large interest if the voyage prospers. Ĭoncepts of insurance has been also found in 3rd century BC Hindu scriptures such as Dharmasastra, Arthashastra and Manusmriti. His article detailed an historical account of a Severan dynasty-era life table compiled by the Roman jurist Ulpian in approximately 220 AD that was also included in the Digesta. Bradley (1870–1892 AD), once employed as an actuary for the Mutual Benefit Life Insurance Company, submitted an article to the Journal of the Institute of Actuaries.
Supreme Court Associate Justice Joseph P. The tablet prescribed the rules and membership dues of a burial society collegium established in Lanuvium, Italia in approximately 133 AD during the reign of Hadrian (117–138) of the Roman Empire. In 1816, an archeological excavation in Minya, Egypt produced a Nerva–Antonine dynasty-era tablet from the ruins of the Temple of Antinous in Antinoöpolis, Aegyptus. The law of general average is the fundamental principle that underlies all insurance. It articulates the general average principle of marine insurance established on the island of Rhodes in approximately 1000 to 800 BC, plausibly by the Phoenicians during the proposed Dorian invasion and emergence of the purported Sea Peoples during the Greek Dark Ages (c. In the Digesta seu Pandectae (533), the second volume of the codification of laws ordered by Justinian I (527–565), a legal opinion written by the Roman jurist Paulus in 235 AD was included about the Lex Rhodia ("Rhodian law"). 1755–1750 BC) stipulated that a sea captain, ship-manager, or ship charterer that saved a ship from total loss was only required to pay one-half the value of the ship to the ship-owner. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel capsizing.Ĭodex Hammurabi Law 238 (c. Methods for transferring or distributing risk were practiced by Babylonian, Chinese and Indian traders as long ago as the 3rd and 2nd millennia BC, respectively. Pictured, Governors of the Wine Merchant's Guild by Ferdinand Bol, c. Main article: History of insurance Early methods Merchants have sought methods to minimize risks since early times. The insurer may hedge its own risk by taking out reinsurance, whereby another insurance company agrees to carry some of the risks, especially if the primary insurer deems the risk too large for it to carry. A mandatory out-of-pocket expense required by an insurance policy before an insurer will pay a claim is called a deductible (or if required by a health insurance policy, a copayment). If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster. The amount of money charged by the insurer to the policyholder for the coverage set forth in the insurance policy is called the premium. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured, or their designated beneficiary or assignee. Furthermore, it usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship. The loss may or may not be financial, but it must be reducible to financial terms. The insurance transaction involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the insured in the event of a covered loss.
A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.Īn entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. For other uses, see Insurance (disambiguation).Īn advertisement for a fire insurance company Norwich Union, showing the amount of assets in coverage and paid insurance (1910) Financial market participants
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