HISTORY OF INSURANCE

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and more modern monetary economies (with markets, currency,financial instruments and so on). The former is more primitive and the insurance insuch economies entails agreements of mutual aid. If one family's house is destroyed theneighbours are committed to help rebuild. Granaries housed another primitive form of insurance to indemnify against famines. Often informal or formally intrinsic to localreligious customs, this type of insurance has survived to the present day in somecountries where modern money economy with its financial instruments is not widespread.In the late 1680s,Edward Lloydopened a coffee house that became a popular haunt of ship owners, merchants, and ships' captains, and thereby a reliable source of the latestshipping news. It became the meeting place for parties wishing to insure cargoes andships, and those willing to underwrite such ventures. Today,Lloyd's of Londonremainsthe leading market (note that it is an insurance market rather than a company) formarine and other specialist types of insurance, but it operates rather differently than themore familiar kinds of insurance. Insurance as we know it today can be traced to theGreat Fire of London,which in 1666 devoured more than 13,000 houses. Thedevastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren'sinclusion of a site for 'the Insurance Office' in his new plan for London in 1667."A number of attempted fire insurance schemes came to nothing, but in 1681NicholasBarbon,and eleven associates, established England's first fire insurance company, the'Insurance Office for Houses', at the back of the Royal Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office. WHAT INSURANCE IS ? A promiseof compensation for specificpotentialfuturelosses inexchangefor aperiodicpayment.Insurance is designed toprotectthefinancial wellbeing of anindividual, company or otherentity in the case of unexpectedloss.Someformsof insurance arerequired by law,while others areoptional.Agreeing to thetermsof aninsurance policy createsacontract between theinsuredand theinsurer.In exchange for payments fromthe insured (called premiums), the insureragreestopay thepolicy holderasumof money upon the occurrence of a specificevent.In most cases, the policy holder pays part