A Brief History of Insurance

A Brief History of Insurance

Every Canadian who owns a vehicle or a home has some form of property and casualty insurance, but why do we need it?  Where did it come from?  Let’s take a brief look at the origins of insurance.

Why Do We Need Insurance?

Let’s go way, way back and pretend we are an early version of ourselves, perhaps not unlike the Geico caveman.  As a caveman, risk surrounds you and threatens your very existence.  One false step and you’re a wooly mammoth’s snack.  You have to worry about cave invasions, tool and weapons theft, stampeding herds, giant reptiles and fire.  How do we manage such things?  Well spreading out your risk is a good start.

Spread Of Risk

The main concept of insurance, spreading of risk, has been around as long as human existence.  Early humans would hunt herds of animals in groups to spread the risk of being gored to death or trampled.  If one in the group was killed, there was a good chance the others would escape or ensure the hunt was still a success.  This is a form of insurance.  Later, shipping cargo in several different caravans would avoid losing an entire shipment in case one caravan was robbed.

Earliest Written Form Of Insurance

The first written insurance policy appeared in ancient times on a Babylonian obelisk monument with the code of King Hammurabi carved into it around 2250 B.C.  The ”Hammurabi Code” was one of the first forms of written law.  These ancient laws offered basic insurance in that a debtor didn’t have to pay back his loans if some personal catastrophe made it impossible, i.e. disability, death, flooding, etc.

Guilds Of The Dark And Middle Ages

In the dark and middle ages, most craftsmen were trained through the guild system.  Apprentices spent their childhoods working for masters for little or no pay.  Once they became masters themselves, they paid dues to the guild and trained their own apprentices.  The wealthier guilds had large coffers that acted as a type of insurance fund.

The Great Fire Of London

In 1666 the city of London was almost entirely burned to the ground.  As a result of this, around 1681 Dr. Nicholas Barbon with other speculators floated a joint stock entity known as “The Fire Office”.  This is regarded as the first modern fire insurance company.  Metal plaques or badges were erected by insurers to signify that the property was insured.  If there was no plaque on your door, no help was coming when there was a fire.

Lloyd’s Coffee House

1688 saw the emergence of marine underwriting.  A London man named Edward Lloyd owned a coffee house which became a primary meeting place for merchants, ship owners and others seeking insurance.  A basic system for funding voyages to the new world was established.  A single voyage would have multiple underwriters who would try to spread their risk as well by taking shares in several different voyages.  Premiums were often paid in tobacco and treasures from the new world.

Mutual Insurance

Farm Mutuals became popular in North America in the 1800’s and still thrive today.  Some popular examples would be State Farm, Farmers, and Co-Operators.  In Canada, Economical Mutual and Gore Mutual are two of the largest mutuals but there are literally scores of mutual insurance companies in every province.  The concept of a mutual was originally that the policyholders owned the company and would contribute premiums into a sort of pot to pay out any losses.  Any profits were refunded to policy holders.

The Information Era: Online Insurance Quotes

Today, as insurance is ever more complicated, it is actually becoming more accessible and easier for consumers to learn about and purchase insurance.  More and more people are looking online for insurance quotes and information to help them make an educated buying decision.  As the first online insurance brokerage in Canada, KTX Insurance Brokers is looking to write its own chapter in the history of insurance.  Visit our site today for insurance quotes and information to help insure your slice of life at.


Sean Graham

Sean Graham

Sean has been an Insurance Industry professional for the past 15 years after receiving his education from Mohawk College's Insurance Program.

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