BIRTH OF INSURANCE

Taranaki Daily News, 11 August 1930, Page 5

BIRTH OF INSURANCE

THOUSANDS OF YEARS AGO. LAND AND OCEAN COMMERCE. Insurance had its beginnings in the adventurous caravan journeys of the East. The insurer risked the safe termination of the undertaking, and if this did not eventuate the insured was discharged from liability for money lent. Insurance, in common with other important sections of modern commercial life, has a history extending over thousands of years (writes “R.S.” in The Australasian Accountant and Secretary.) The first people who are known to have practised any form of insurance were the Babylonians, who lived in the once-fertile but now desert area of Mesopotamia. About 3000 B.C. they developed a contract resembling the modern respondentia bond, with' the difference that it was applied to land instead of sea transit.

A merchant requiring capital to make a trading caravan journey used to borrow. it, and pledge the merchandise and vehicles of transport as security for the loan. If, however, these articles were accidentally lost owing to the attacks of brigands, for example, the lender’s security had gone, and the borrower was under no obligation to repay the loan. If the journey were successfully concluded, the loan was repaid with interest at the fixed rate of 100 per cent. The Phoenicians, the great sea traders of the day, adapted the system for sea transit, so that these people were really the fathers of modern marine insurance.

. The Greeks, and later the Romans, in the seventh century 8.C., copied the •Phoenicians, and further developed the scheme. The 100 per cent, interest rate was dropped and the rate fixed by the bargaining of the market. At this time, too, mercantile law was elaborated for they inserted certain provisions in the contract. One of these, for example, was that the -ship was not to deviate from its customary route. An earlier Roman practice was for the State to compensate the owners of ships which had been lost in storms, and later on the emperors reintroduced this scheme. At this time there was a form of life assurance in existence in connection with friendly societies, which had been formed to provide for the burial of their members, and in some cases for annuities for old age. Evidence also exists to show that after 200 A.ID. oid;nary life insurance was undertaken.