Who invented life insurance

In the late s, shipping was just beginning between the New World and the Old, as colonies were being established and exotic goods were ferried back. The practice of underwriting emerged in the same London coffeehouses that operated as the unofficial stock exchange for the British Empire. A basic system for funding voyages to the New World was established. In the first stage, merchants and companies would seek funding from the venture capitalists of the day. They, in turn, would help find people who wanted to be colonists, usually those from the more desperate areas of London, and would purchase provisions for the voyage.

In exchange, the venture capitalists were guaranteed some of the returns from the goods the colonists would produce or find in the Americas. It was widely believed you couldn't take two left turns in America without finding a deposit of gold or other precious metals.

When it turned out this wasn't exactly true, venture capitalists still funded voyages for a share of the new bumper crop: tobacco. After a voyage was secured by venture capitalists, the merchants and ship owners went to Lloyd's to hand over a copy of the ship's cargo manifest so the investors and underwriters who gathered there could read it. Those who were interested in taking on the risk signed at the bottom of the manifest beneath the figure indicating the share of the cargo for which they were taking responsibility hence, underwriting.

In this way, a single voyage would have multiple underwriters, who tried to spread their own risk by taking shares in several different voyages. By , Blaise Pascal, the Frenchman who gave us the first calculator, and his countryman Pierre de Fermat, discovered a way to express probabilities and better understand levels of risk. In , the Great Fire of London destroyed more than 13, buildings. As a response to the chaos and outrage that followed the burning of London, groups of underwriters who had dealt exclusively in marine insurance now formed companies that offered fire insurance.

Life insurance began to emerge in the 16th and 17th centuries in England, France, and Holland. The first known life insurance policy in England was issued in But, lacking the tools to properly assess the risk involved, many of the groups that offered insurance ultimately failed. Insurance companies thrived in Europe, especially after the Industrial Revolution.

Across the Atlantic, in America, the story was very different. Colonists' lives were fraught with dangers that no insurance company would touch. For example, starvation and related diseases killed almost three out of every four colonists in the Jamestown settlement between and , a bleak period that came to be known as "The Starving Time.

Ultimately, it took more than years for insurance to establish itself in America. For more about that, see " The History of Insurance in America. Risk Engineering. Tee Williams. Accessed Dec. Lloyd's of London. Swiss Reinsurance Company Ltd. London Fire Brigade. The National Archives.

Museum of London. Covello, Joshua Menkes, and J. Journal of the Royal Statistical Society. Encyclopedia Virginia. It was the first company in the United States to make life insurance available to the working class. That company eventually became Prudential. Listen to free podcasts to get the info you need to solve business challenges! Group life insurance was born when Equitable Life Assurance Society now AXA Equitable wrote a policy covering all employees of the Pantasote Leather Company without requiring individual applications or medical exams.

In , Equitable organized a department to promote group coverage and soon began insuring employees of Montgomery Ward. See also: Employees favor companies that offer voluntary benefits. By the eve of the Great Depression, there were more than million life insurance policies — equivalent to one policy for every man, woman and child living in the United States at the time.

The insurance is underwritten by a pool of commercial insurers, and the federal government pays administrative expenses and the extra cost resulting from the increased risk of military duty. See also: Military families top public in coverage.

By the mids, 72 percent of the adult population of the United States and more than 90 percent of all husband and wife families owned some form of life insurance.

A total of 2, people perished in the Sept. Subsequent studies in the years since have revealed that the gap has not improved. Life insurance by the numbers. What we talk about when we talk about death. Think Advisor. Select basic ads. Create a personalised ads profile.

Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways The first insurance company in the U.

In the late 19th century, scandals and shady practices rocked the young insurance industry. Under the McCarran-Ferguson Act of , insurance companies became exempt from most federal regulation and are instead subject to state law. In recent years, the internet has had a major impact on how insurance is sold and how insurance companies evaluate risk. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

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