Insurance Help & Information

 As is the case today, ancient insurance was an economic structure designed to protect the investment of merchants and individuals.  Often it was bigger business protecting, and thereby incenting, smaller business operations.

In the Babylonian kingdom about 2000 B.C., the Code of Hammurabi, one of the first written codes of law in history, provided the first written record of insurance in the form of “bottomry.” This was a practice involving lenders advancing the ship-owning merchant the full cost of the cargo. If the voyage was a success, the ship owner repaid the bank at a certain interest rate which included a premium to reflect the risk of loss. If the ship was lost, the lender forgave the loan. Traders whose cargoes were advanced by merchants were thus protected from debt just in case the cargo was lost. This practice spread throughout the Mediterranean region until finally the Romans provided a general law of compensation for direct and indirect injuries.

In addition, Greek, Indian, and Phoenician traders used an ancient insurance called the “General Average.”  About 700 B.C. , the General Average insurance involved a cooperative effort that if cargo was compromised, the loss must be made good by all interests involved: “That which has been destroyed of all shall be replaced by the contributions of all”. In Europe during the eleventh and twelfth centuries, Danish navigators began forming guilds whose role was to protect its members against loss and damage at sea.

Who could have guessed clear back in ancient times that insurance as we know it today would be of such benefit to people that it would outlast even great societies like the Roman Empire. 

Yet, throughout history, from ancient time to the Great Fires of London to today, there have been the protections of families and neighbors working together in the event of fire, and gracious strangers donating goods to help feed and clothe families who have lost everything due to weather or other unforeseen events.

 As far back as 3000 BC in China, merchants would spread their risk out among ships in order to reduce the risks of losses from piracy or other losses, and ships captains would work together to help with safety or protection…a mix much like today.