Insurance has become an important part of our life. Without insurance moving from one place to another has become quite impossible. It began way earlier and now it has gained a firm ground in everyone’s life. In the USA, the history of the insurance industry says that it came into existence when the USA became a single nation.
What is the history of the insurance industry?
Insurance became popular when the word risk was spread among the human race. As long as risk will be there, insurance will continue to prevail. There was a time when countries and their citizens used to spread risk among numerous people. These risks became difficult and troublesome for all. This led to the emergence of the insurance industry. Thereon, the history of the insurance industry is no more history anymore.
History has changed the entire outlook of insurance and goods handling. It is because of risks that the insurance industry is growing leaps and bounds.
History of the insurance industry says that the first company was co-founded by Ben Franklin way back in 1752. It also suggests that it has evolved over some time and has become way more advanced with time. This has taken place subject to new risks that emerge after each development.
In the earlier 19th century various scandals took place. It gave a great setback to the insurance industry. By the McCarran-Ferguson Act of 1954, the insurance industry is free from federal regulation. It is regulated by the state laws.
The expansion of the insurance industry has been there and it is found that many companies have merged into one another and there have been various tie-ups with the finance sector as well. This gave an additional boost to this industry.
Who was America’s first insurer?
The history of the insurance industry starts with Philadelphia in North America. At that time it was one of the largest cities there. Around 15,000 people were residing there. The houses were prone to fire attacks as they were mostly made of wood. The situation became even worse because of the closely built houses. Philadelphia now has a different construction with broader streets and houses made of bricks and mortar.
In the year 1752, Benjamin Franklin and many other famous citizens founded a firm called “The Philadelphia Contributionship” for the insurance of a house that caught fire accidentally. It was the first fire insurance company and Franklin himself publicized it.
Read Also: Complete Guide to Fire Insurance and its Benefits!
The claim process of insurance was no different from modern days. The inspection was there with the help of the surveyor on the site. If he found the things to be the same as the insured informed them, the claim was successful.
The emergence of frauds and scandals
The industry expanded and its popularity gave birth to many scandals back to back. Many small insurance companies emerged and citizens were prone to scandals and frauds. The sandals were such that the premiums were too high and no claim was there even after the damage was proved.
The laws came into existence to curb down these issues and frauds but later until the 1900s as well, things were not good and transparent.
Why invest in Insurance?
Investing or purchasing insurance is always the need of the hour for all. Anyone, be it the individual or the businessmen, all are at risk of their goods and commodities. The insurance companies have also acted quite well and have offered many services to their customers. This has in-turn increased the customer base and investing in insurance has become a practice.
To overcome risk, throughout the history of the insurance industry, they have improved and now we can see a better prospect of investing in any kind of insurance.
The insurance industry and worldwide expansion
Each industry has expanded at a very rapid pace and so is the insurance industry. Nothing is a constraint to the domestic market. People are exporting and importing goods and commodities from one country to the other and this has led to the expansion of the insurance industry worldwide. This happened in the early 20th century.
If we compare the market of the insurance industry, a picture comes out that major companies are in Europe and North America. The leading market in the world with maximum premiums collected in terms of percentage was The United States, Japan, The United Kingdom, Germany, France, the Soviet Union, Canada, Italy, South Korea, and Oceania in the highest to lowest order.
What is the market of the insurance industry today?
Although the history of the insurance industry has not been that glorious; now it is flourishing and is on a boom. The insurance industry these days has changed drastically and the basic development came due to the advancement of the Internet industry. The online platform is something that is very advantageous to all. Verification, transaction, and the claim process, nothing remains aloof from this internet world.
Everyone prefers the online mode of transaction for any kind of purchasing process. The insurance is no different from it and hence the market today of the insurance industry has expanded so much. Also, for the insurance companies, it has become far easier to merge and co-ordinate with the financial firms and penetrate deeper into the market.
Insurance regulations
It was not clear with the insurance companies as to how much they need to hold before paying off the claim. No proper estimate was there. It was also seen that many people purchased life insurance and when they were unable to pay the premium, they use to sell their policy to someone else for the sake of money leading to moral hazard. Then a famous mathematician Elizur Wright, also a Massachusetts Commissioner of Insurance successfully persuaded the Massachusetts legislature to enact the valuation of laws.
Many state government laws were also implanted and they were different for each type of insurance and varied from one country to the other which is still the same.
Conclusion
Though the insurance is to make your life safe and secure and boost you financially in case of any untoward incidence, it has several disadvantages as well. Many people indulge in crime to take the claim as a beneficiary and many more. The history of the insurance industry has a lot to tell but it is indeed one of the strongest parts of human beings.
