How Long Has Insurance Been Around?

We don’t often think about insurance, even though a major life event could forever change our feeling about insurance, and the importance of having it.

Insurance has been a vital part of society’s financial plan for centuries. The concepts of insurance and risk pooling are important aspects of civilization because they help to ameliorate the financial devastation s brought on by the likelihood of predictable yet debilitating effects.

All sorts of devastating events will happen in our lifetimes: death, injury, sickness, burned property, vehicle accidents, and so on. Because we are aware that these happen, we can calculate the probability of various accidents occurring within a given time among a given population of people. This data gives insurers the information they need to develop products that can protect us and our loved ones from financial damages caused by various accidents or occurrences. The development of these processes happened over a period of time and is the basis for the insurance we have today.

How Long Has Insurance Been Around?

The Early History of Insurance 

King Hammurabi developed a system of codes known as the Code of Hammurabi around 1780-1770 B.C., which many believe were the first recorded instances of insurance in civilized society.

England in the mid to late 1600s defined the need for insurance as the amount of money necessary to provide for those left behind due to the death of a primary breadwinner, the loss to a creditor of a debt owed, or protection of a renter when their landlord dies, terminating the lease contract between the two. Although the thought that one’s life could be reduced to a financial sum was distasteful to many in English society, its necessity eventually outweighed these concerns.

Insurance later became popular with one subset of English society — gamblers. Wagering or betting societies were established to purchase policies on the lives of unrelated third parties for profit from the death of that individual. This led to passage of the Gambling Act of 1774, banning the purchase of insurance on lives for which the purchaser was not financially dependent on the insured, a concept we now call insurance interest. The definition of insurable interest was an important one to derive. It helped mitigate the potential for fraud and provided a deterrent to people considering taking out insurance on property they did not own for the purposes of later collecting money upon the property’s destruction.

Development of the Insurance Industry in the United States 

One of the most important developments for insurance in the United States came about with the codification of insurance law in the state of New York. Formed as the New York State Insurance Department in 1859, the agency became the primary regulator for insurance companies in the United States doing business in New York. By 1871, a gathering of insurance superintendents from 18 other states met to discuss the creation of uniform rules and regulations related to insurance in what became the forerunner of the National Association of Insurance Commissioners. The creation of uniform codes helped formalize and professionalize the practice of insurance in the country and led to the creation of laws and standards for how risk is reviewed, priced, and treated by insurers for the benefit of the policyholder as well as society.


Douglas Montgomery is a freelance writer concentrating on finance and insurance. Renters looking for quality insurance should check out renters insurance.

Image credit goes to Denis Lauzon Agency.