Insurance, as we know it today, has a long and fascinating history that stretches back thousands of years. The concept of sharing and minimizing risk has existed since ancient times. In fact, early forms of insurance were practiced by Babylonian traders as far back as 1750 BC. They used a system called “bottomry,” where ship owners would receive a loan to fund voyages, and if the ship was lost, the loan did not have to be repaid. This was one of the earliest examples of risk sharing.
Later, in ancient Greece and Rome, guilds and mutual aid societies were established to support families of deceased members and help in times of illness or loss. In medieval Europe, merchant guilds practiced similar systems, where members would contribute to a common fund to aid one another in cases of disaster. These systems were informal but served as the foundation for modern insurance.
The birth of modern insurance began in the 17th century in London, particularly after the Great Fire of London in 1666. This tragic event destroyed over 13,000 homes and highlighted the need for a more formal method of compensation. In response, property insurance was developed, and one of the first fire insurance companies was established by economist Nicholas Barbon. Around the same time, marine insurance started flourishing in Lloyd’s Coffee House, which eventually became Lloyd’s of London—still a leading name in the insurance world today.
Over time, insurance evolved to cover many types of risk—life, health, property, travel, and more. The industrial revolution played a major role in the growth of insurance, as urbanization, factories, and complex businesses introduced new types of risks. Insurance companies grew in number and size, and governments began regulating the industry to ensure fair practices.
Today, the insurance industry is a global powerhouse, worth trillions of dollars. Digital transformation has revolutionized how insurance is purchased, processed, and claimed. Online portals, mobile apps, and AI-driven tools have made the industry more accessible, efficient, and customer-friendly. Despite its modern appearance, the core idea of insurance—spreading risk and helping one another—remains unchanged from ancient times.
The history of insurance shows us how deeply it is rooted in human society. Wherever people have faced risks, they’ve found ways to protect themselves, and insurance has been a part of that journey. Its evolution from informal agreements to regulated, multi-billion dollar industries proves its importance and relevance in every age.
Another myth is: “Insurance is too expensive.” While premiums do involve regular payments, the protection they offer far outweighs the cost. For example, a health insurance policy that costs a few thousand rupees a year can cover medical expenses worth lakhs. Not having insurance can end up being far more expensive in the long run.
Some people believe: “Insurance companies never pay claims.” This is partially based on isolated bad experiences or a lack of understanding of policy terms. Insurance companies are bound by law to honor valid claims. However, many claims are rejected due to incomplete documentation or policyholders not disclosing key information when buying the policy. To avoid such issues, it’s important to be honest, read the policy carefully, and keep all records in place.
There’s also a belief that “young and healthy people don’t need insurance.” In fact, buying insurance at a young age is smart because premiums are cheaper and coverage is easier to get. Life and health insurance become more expensive as you grow older or develop health issues. Starting early ensures better deals and lifelong protection.