Insurance Evolution: From Ancient Times to Modern Day

Welcome to Jeevan Bima Bazaar! You may think that insurance is a boring subject, but believe it or not, insurance has an exciting and interesting ancient history. Yes, it is absolutely true. Our forefathers started the provision of insurance. He also introduced insurance to protect himself from economic losses caused by various types of risks.

In this article, we will take you on a journey of the insurance industry through time and trace the evolution of insurance from its ancient roots to modern day practices.

But wait, why you should care about the development of insurance? Insurance is an essential part of human life, whether you realize it or not. You build a house or buy a new car. Your house or car gets damaged due to some untoward incident. Then it may be that you are unable to bear such loss. If you suddenly come under the grip of some major disease. So you may not be prepared for the medical expenses. Insurance is a tool that prepares you to avoid financial losses arising out of such risks.

The history of insurance helps you understand the importance of insurance. When you know that for the solution of which problems your ancestors adopted the provision of insurance, then you can choose the right insurance considering your current situation.

Historical Development of Insurance - The journey of development of insurance from ancient times to modern times has been a fascinating journey. Insurance may sound like a modern invention to you, but in fact the concept of protecting society from financial loss is age old.

In ancient times, merchants used a form of insurance called "bottomry" to protect their goods during sea voyages. In this method of insurance, the captain of the ship used to borrow money from the investors. If the ship reached its destination safely, the loan was repaid with interest. But if the ship was lost at sea, the investors' money would have been lost.

This form of insurance grew rapidly by the 17th century. Thereafter, formal insurance companies started emerging. The first insurance company was established in London in 1688. This insurance company offered the plan to the people to compensate the people for the fire insurance i.e. the economic loss due to the fire in the house. Subsequently, other companies followed suit and offered plans against other risks such as death and disability.

When the industrial revolution and urbanization took place in the 19th century, there was a flood of insurance companies. Because industrialization and urbanization gave rise to new risks and opportunities.

In the 20th century, insurance continued to grow and expand. As different types of industries continued to grow, so did the emergence of different types of insurance products. For example- auto insurance with the development of automobile industry, health insurance emerged due to advancement in medical technology. Globalization of the economy has also created new opportunities, but with it also new risks. This resulted in the development of new types of insurance such as political risk insurance and cyber insurance.

At present, insurance is many trillion dollar industry. It touches every aspect of your life. From the homes we live in and the vehicles we drive to the places we do business or health care, today there are insurance products available for everything. Insurance protects us from financial loss, due to which we feel peace of mind.

The historical evolution of insurance is a fascinating journey through human ingenuity and creativity. From ancient times to modern times, insurance has evolved and expanded to meet the changing needs of society. So, the next time you plan to buy an insurance policy, remember the rich history behind this essential tool for risk management.

Evolution of Insurance Products – The insurance industry has adapted and evolved to meet the changing needs of the society and this is the story of evolution of insurance products. As risks become more complex and interrelated, insurance products have to come up with new and effective ways to manage risk accordingly and protect people from financial loss.

Insurance started with marine insurance. As trade and commerce grew, so did the nature of marine insurance. It provides financial protection against a variety of risks such as piracy, shipwreck and cargo damage.

In the 19th century, a new form of insurance was born. In this new format, it provides financial security to the families in the event of the death of the earning member of the family. This new form of insurance is known as life insurance. In the same period, as medical technology progressed, another form of insurance was born. It has now started providing financial security to people for medical expenses. This new form of insurance is known as health insurance.

In the 20th century, the insurance industry saw explosive growth. At this time the automobile industry and other technological developments were happening very fast. Due to which auto insurance was born and with time it became very popular. Auto insurance provides financial protection in case of death of drivers, accidents of vehicles or theft of vehicles. The development of the aviation industry was followed by the development of auto insurance, which provides financial protection against the risks associated with air travel.

In recent years, insurance products have continued to evolve and have been adapted to meet the changing needs of society. Cyber insurance emerged to protect against losses in the cyber world, providing economic protection against losses related to data breaches, cyber attacks and other cyber risks.

Due to the changes in the climate, people have to suffer a lot of economic losses due to floods, storms, earthquakes etc. To provide financial protection against this loss, flood insurance and crop insurance were born.

The rise of the gig economy has also created new opportunities for the insurance business, leading to the development of new insurance products such as ride-sharing insurance and freelance insurance, which provide financial protection for workers in non-traditional employment arrangements.

The insurance industry has kept pace with the changing needs of the society. From marine insurance to cyber insurance, insurance products have played a vital role in managing risk and protecting against financial loss.

Government intervention in the insurance industry - The Government of India has an important role to play in regulating the insurance industry in India. From ensuring consumer protection to promoting competition and stability, government intervention becomes very important in the development of the insurance industry.

In India, the first major government intervention in the insurance industry took place in 1956. This was the time when the Life Insurance Corporation of India was established by merging all the small and big life insurance companies working in India. Which could do life insurance business in India. The general insurance company was also established around this period. Which could do business like different types of insurance business like auto insurance, commercial insurance etc.

Subsequently, in 1999, the Insurance Regulatory and Development Authority (IRDA) was established by the Government of India with the objective of regulating and promoting the growth of the insurance industry in India. IRDA is an independent regulatory body whose job is to look after the insurance business in India in all respects.

One of the major roles of IRDA is to regulate the conduct of insurance companies with the objective of protecting the interests of the policyholders. IRDA has the power to issue directions and also has the power to take enforcement action against those insurance companies if any company violates these rules. IRDA also has the power to approve new insurance products and regulate the pricing of insurance products.

In the year 2000, the Government of India allowed private companies to limit FDI in the insurance sector to 26%. In 2015, the FDI limit for foreign insurers in the insurance sector was raised to 49% from the previous 26%, which can operate as standalone entities.

The Government of India has been actively involved in shaping the insurance industry with the goal of promoting growth, ensuring consumer protection and expanding insurance coverage to all sections of the society. Government initiatives and programs have helped in making insurance more accessible and affordable to the general public, and have helped in promoting financial literacy and awareness about insurance. As the Indian insurance industry continues to grow, it is likely that the government will play a significant role in shaping its growth.

The insurance industry has come a long way from ancient times to today's complex insurance products. Today it is not only the products that have changed – but the role of insurance in society has also evolved.

We have seen how the insurance industry has changed due to historical developments, technological advances and changing needs of consumers. We have also seen how government intervention has played a vital role in regulating the industry and promoting its growth.

One thing is clear here that the insurance industry is not static. If you look at the history of the insurance industry, you will find that from marine insurance to cyber insurance and from health insurance to agricultural insurance, all insurance industries have been created to provide economic protection to new risks. So we can say that the insurance industry has to keep on adapting and innovating to remain relevant and effective.

One thing is certain here that insurance will continue to play an important role in our lives by providing security and peace of mind in this uncertain world. We can say that as long as there is risk in this world and due to that risk there is economic loss to humans, the insurance industry will continue to play an important role in meeting the needs of the society.