2. Introduction and History of Insurance

3. What is Insurance? Introduction and History of Insurance
Insurance provides protection against financial losses by
Pooling the resources of policyholders

4. Introduction and History of Insurance
Insurance is created when people like you and your neighbors pool their resources to protect themselves from loss
If the risk of loss can be spread over a large enough group, the effects of the loss to any one individual can be minimized

5. Introduction and History of Insurance
Where did insurance come from?

6. Introduction and History of Insurance
“The Code of Hammurabi”
Created by the Babylonians around 2100 B.C. to guarantee safe arrival of their goods by caravan

7. What types of perils would the caravan have faced?
Weather
Theft
Breakdowns

8. Introduction and History of Insurance
As history progressed, the need for insurance increased
The Phoenicians and Greeks used insurance for their seaborne commerce
The Romans were the first to use burial insurance

9. Introduction and History of Insurance
The first Insurance Company was formed in 1688 in London
(Lloyds of London)
Merchants, Ship-owners, and Underwriters met at a coffeehouse to discuss how to protect the sea voyages

10. Introduction and History of Insurance
Modern insurance traced back to the “Great Fire of London” in 1666
13,200 houses were destroyed
Societies were formed to pool money for losses
This event also created the need for modernizing fire fighting

11. Introduction and History of Insurance
The first American Insurance Company was formed in Charleston, South Carolina in 1735
Fire Insurance Companies began spreading to New York City and Philadelphia

12. Introduction and History of Insurance
Benjamin Franklin
Founded America’s first successful insurance company
Founded the first mutual insurance company
Encouraged prevention by educating the public about fire hazards
Refused to insure wooden buildings
“An ounce of prevention is worth a pound of cure”

13. Introduction and History of Insurance
Insurance is Big Business
The United States Insurance Industry:
Trillion dollar business
Employs over 2.5 million people in US
As the population ages and wealth grows the industry will continue to expand