June 28 is National Insurance Day and we’re celebrating the industry dedicated to making life’s risks a little more manageable with a look at its past.
These days, getting insurance coverage for your car, home, health, and life are standard markers of responsible adulthood. If you’re really on top of things, you can add coverage for your jewelry, pets, phone, and just about anything else you can imagine, but that hasn’t always been the case.
A lot has changed since the first insurance company in the US was founded in Philadelphia in 1752. From this single company, the US insurance industry expanded rapidly, adding new companies and coverage types as demand for them developed.
Let’s take a journey through history and explore seven interesting facts about the history of insurance in the US, how the industry has evolved and how it’s grown to be worth over $1.3 trillion.
1. The Insurance Party Started around 1750…BC
That right, the very first recorded insurance policy was written into the Hammurabi Code in ancient Babylon to protect merchants shipping goods by sea. Trade guilds in the Middle Ages pioneered the idea of group insurance coverage, and the ancient Romans had a form of private life insurance.
2. Benjamin Franklin Helped Start the First US Insurance Company
The man who discovered electricity and invented bifocals, swim fins, and lighting rods also helped introduce property insurance to Philadelphia in 1752. That’s right, one of the founders of the first insurance company in the US was none other than Benjamin Franklin.
3. Fear of Fire Fueled the Early Growth of the Insurance Industry
Benjamin Franklin & Co. founded The Philadelphia Contributorship for the Insurance of Houses from Loss by Fire to protect property owners from the very real risk of losing everything to fire. The firm was modeled after English insurance firms created after London was destroyed by fire in 1666.
The Constributorship sent inspectors to evaluate properties, offering seven-year insurance policies for those that met their standards and rejecting others with higher risks. Their exacting standards eventually led to the creation and adoption of building codes and zoning laws.
4. Early Life Insurance Policies Sparked Religious Outrage
When a group of Presbyterian ministers started America’s first life insurance company in 1759, other religious leaders were outraged at the idea of putting a dollar value on human life. They came around pretty quickly, however, once they realized the benefits to widows and orphans.
Following this early start, life insurance, along with business insurance and disability insurance, really started to take off during the Industrial Revolution.
5. The First Cars Were Sometimes Insured As Marine Vessels
The dangers of cars to both property and people were clear from the start. Gilbert J. Loomis bought the first car insurance policy from Travelers Insurance in 1897, but some insurers weren’t sure how to treat these newfangled contraptions. One policy sold in 1901 insured an automobile under a marine policy, classifying the vehicle as a ship navigating on dry land.
6. Getting Insurance Was Once a Very Risky Business
Before the government stepped in to regulate the insurance business in 1945, the industry was a chaotic mix of legitimate companies, fraudsters, and ruthless competitors intent on forming monopolies. You might faithfully pay your premiums only to file a claim and discover your insurance company had disappeared or was actually a Ponzi scheme with no money to help you. Government intervention was a welcome relief to frustrated customers.
7. Inventions, Wars & Economic Trends Led to New Types of Insurance
As new technologies brought new risks and new prosperity, the insurance industry responded. The Industrial Revolution sparked rapid growth in life, disability, and business insurance policies. With cars and airplanes came automobile and aviation insurance.
Economic conditions after World War II inspired employers to offer life and health insurance benefits. Space satellite insurance was created in the 1960s, while cyber insurance started to make a mark in the 1990s.
The trend continues today with recent insurance innovations like smartphone insurance to protect your devices and pet health insurance to cover your beloved fur babies — both of which would probably be pretty amusing to good ‘ole Ben Franklin.
The Future of Insurance in America
In many ways, the history of insurance reflects the history of America, and so will the future. Just as new technology, increased prosperity and changing societal norms led to the creation of new types of coverage, the developments of the next few decades will shape where the industry goes next.
Some people think insurance is boring, but not us! We’ll be paying close attention to see how things like climate change, green technology, artificial intelligence, and increasing justice and equality shape the insurance industry — and our country — in the years to come.