It would not be remiss to say the concept of insurance is one of the great miracles of our civilization. There is probably nothing more fundamental to our basic instincts than the desire to protect oneself against injury, insult, property damage or even death. When confronted with one of those possibilities man has always looked for a way to avoid or minimize the loss. We found ways to cover our nakedness such as clothing or moving to a warmer environment. We found ways to protect ourselves from the elements by seeking shelter in caves, hollows of trees, building structures and wearing protective garments. We found ways to protect ourselves against the aggression of others by invention of weapons of war. We found ways of protecting ourselves when in the course of our interactions with others our actions brought physical, emotional, or financial angst not intended at the outset. It would be difficult to find any human interaction which is not impacted by the concept of insurance.
One cannot eliminate all possibilities of loss due to societal or environmental exposure but one can “spread the risk” so when it occurs it is not so devastating to the individual or individuals experiencing the loss. Here are two early societal or environmental examples and how mankind dealt with them.
In ancient Rome when the legionnaires went to battle, no one knew if they would be the one returning bearing his shield or if he would be coming home upon his shield. The agreement was made prior to battle that a portion of the soldiers’ pay would be set aside in a pool of money overseen by the chief signifier to be used for the fallen soldier’s burial expenses. It was also common for the loot obtained in conquest to be shared among the soldiers with each of them placing part of their loot on the shield of the fallen comrade which was then given to deceased family.
In ancient China when the Yangtze and Yellow Rivers flowed unabated with much of the rich farm lands at their headwaters, farmers would have to run the swift rapids in order to get their produce to markets which were downstream from their farms. With each farmer bearing the burden of getting his crop to market he would run the risk of capsizing, thereby losing 100% of harvest. The farmers devised a program where each farmer would take a portion of his own crop along with a portion of the neighboring farmers’ crops down the river. If one capsized each would have a share in the loss but would still have a portion of his produce make it to market thereby escaping catastrophic loss.
Probably one of the side benefits of this spreading the risk was the feeling of community where the soldier’s families would pray for the well-being of their neighbor and the farmers would have a collective hope everyone would have a successful harvest so all could benefit.
In the modern world, we have built upon the concept conceived by our forefathers to meet the ever changing needs we face. It is a testimony to the ingenuity of our society that no one has to bear the burden of loss alone. We have recognized “no man is an island” and what causes grief for one can have a rippling effect on others. At some point our course will bring us into the personal space of another, and it’s these intersections when circumstances begin to emerge which require us to develop ways of insuring our interactions will be as seamless as possible. This then is the genesis of one of the largest contributor to the gross domestic product. In fact there are suggestions in material available through Department of Commerce, Diffen website and Wikipedia that the finance and insurance industry is the largest contributor at 0.84 percentile of the 3.9% increase in the gross domestic product in 2015. Hats off to the men and women who ply their trade in the insurance profession!!