What is needed to live a good life? Well, according to Amitabh Bachchan, you only need food, clothes, and a house. But is this all?
Our lives are stories revolving around just fulfilling our needs. This process stimulated the great minds of science and they developed many chains and pyramids to understand the flow of needs. Do you know about Abraham Maslow's Need Hierarchy Pyramid?
According to Maslow's need hierarchy, the basic needs of human life are physiological, i.e. food and shelter. When any person gets food and shelter, it is enough for basic survival. Now the next phase of life is ‘security’. It means the ability to remain safe in bad conditions. It can be thought of as an umbrella or a shelter during the rainy season.
Therefore, in today's time, insurance is considered more than a necessity, it is considered a necessity. Anytime in life, any crisis can knock at your door and there is a need to always be prepared for it. Insurance has long been viewed with suspicion, with some considering it a boon and others not being able to understand the benefits it provides. But in today's time, having insurance ensures security not only for your pocket but also for your mind.
The roots of insurance go back a long time. This is not a modern concept but dates back to the Babylonian contracts of 4000-3000 BC. King Hammurabi carved the law on Babylonian monuments and made it the cornerstone of insurance. Initially, this was done to ensure that a debtor is not deprived of his property in catastrophic situations like disability, natural calamities, and death.
Building Union and Security
In the days when craftsmanship came under the guild system or guild system, students used to work for masters of the art at minimal wages. When those students learned the craft properly and then started teaching their students, they also started contributing to the guild system.
These guilds had treasuries that served as insurance funds for masters of the art. These were used in emergency situations, such as if a master's workplace was hit by a fire or flood. It was a way of providing insurance for the livelihood of the art and its master. Upon the death of a master, guilds supported the family of the deceased craftsman.
This method of insurance also inspired today's group coverage insurance. This system not only provided protection to artists but also encouraged others to learn new skills. It also helped them move from farming to business as a profession.
Securing trade via sea routes
This was the time when the most suitable method of trade was through sea routes. Marine insurance became popular in the 15th century. At that time, loans were given to traders for shipment.
These maritime contracts of hypothecation state that if any unfortunate incident occurs while transacting at sea, the traders will not have to pay back the venture investors. These accidents included incidents like casualties, disability injuries, etc.
Insurance interest was used to ensure that losses were covered so that sailors and merchants did not incur any debts. People who suffer loss of life, limb, or goods are insured in such a way that the loss can be covered through the initial investment along with the insurance.
Fire protection
The next major turning point came when the terrible fire of Britain burnt the entire city in the year 1666. After this disaster, fire insurance began to be available across nations to protect businesses and residences.
After being hit by the plague in the 1600s, 13,000 buildings were destroyed in the Fire of London. This was a very difficult situation for the city because during this time people had neither jobs nor houses to live in. To deal with this, those insurers who had an understanding of marine insurance decided to form insurance companies to protect against losses.
This is how insurance companies began to prosper during the “Industrial Revolution.” Thus, active insurance systems began in Europe, especially in Britain. Although its roots were strong, due to circumstances it expanded slowly and after a long time it reached the colonists of America.
American Revolution
In the 1660s, America was suffering from famine and armed conflict, among other issues. It took almost 100 years for the insurance sector to catch up with the industrialized United States.
The concept of insurance reached America with the concept of the individual state. It was welcomed and created in America by one of America's founders.
Property insurance was not a developed concept until the early 18th century. It came with the Philadelphia Contributionship insuring damage to homes by fire. This development was published and advertised in "The Philadelphia Gazette", which brought about significant changes in construction methods. Regulations were strictly enforced in the city as at-risk houses were not covered under insurance policies.
Conclusion
Now that you know about the beginning of insurance, let us move on to the next question. How did insurance come to India? To know the answer to this question, go to the next chapter.
Have you read it till now?
The roots of insurance go back further than today.
It took almost 100 years to bring the insurance sector into the industrial sector of the USA.
Philadelphia Contributionship to insure loss of houses by fire
Insurers who had an understanding of marine insurance decided to form insurance companies to protect against losses.
In today's time, insurance is considered more than a necessity, it is considered a necessity.
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