Chapter 2

Evolution of Insurance

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
 Evolution of Insurance
• Earliest form of insurance; marine trade loans
or carriers contracts.
• Evidenced in Babylonia and India.
• In Rigveda [the most sacred book of India],
reference were made to the concept of
“Yogakshema”.
• “Hummurabi” and of “Manu” shows sharing
of losses in several codes.
 Evolution of Insurance

Marine Fire

Life Miscellaneous
Insurance

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 Marine Insurance
• The oldest form of insurance.
• Under Bottomry Bond, the system of credit and
the law of interest were developed based on a
clear appreciation of the hazard involved.
• If a ship was lost, the loan the loan and interest
were forfeited.
• Travelers by sea and land water were very much
exposed to the risk of loosing their vessels and
merchandise because the piracy on the open
seas and highway robbery of caravans were very
common.
 Fire Insurance
• Originated in Germany in sixteenth century.
• After the great fire in England in 1666 when the
fire losses were tremendous. About 85 percent
of the houses were burnt to ashes and property
worth of 100 million pound sterling were
completely burnt off.
• In 1681 the Fire Insurance Office established in
England.
• “SUN FIRE OFFICE” was a successful fire
insurance institution.
• In India, General Insurer started working in 1850
with Triton Insurance, Calcutta.
 Life Insurance
• First appeared in England in 16th century.
• The first recorded evidence in England being
the policy on life of William Gybbons on June
18, 1653.
• First registered office of “Hand-in-Hand
Society” established in 1696.
• The famous “Amicable Society” for a
Perpetual Assurance Office” started its
operation in 1706.
 Miscellaneous Insurance
• With the industrial revolution in England in the
19th century many forms of insurance took
place in the present world.
• Accident insurance
• Fidelity insurance
• Liability insurance
• Theft insurance
• Lloyd’s Association was the main functioning
institution.
• "The world's specialist insurance
market"
• Type Insurance market
• FoundedLondon, England
1688; 326 years ago
• Founders Edward Lloyd
HeadquartersLloyd's
building, Lime Street
London, United Kingdom
• Key peopleJohn
Nelson (Chairman)
Inga Beale (chief executive
officer)
• Websitelloyds.com
 Kinds of Insurance
Business Point of View Risk Point of View
• Life Insurance • Property Insurance
• Marine
• General Insurance • Fire
• Miscellaneous
• Social Insurance
• Liability Insurance
• Other
• Personal
• Property
• Liability
• Guarantee Insurance

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 Kinds Of Insurance From Risk Point Of View

Personal Property Liability Fidelity

• Life • Marine • Third Party • Fiduciary

• Accident • Fire • Employees • Credit
• Health • Automobile • Motor • Privilege
• Livestock • Reinsurance
• Crop
• Machinery
• Theft

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 Types of Insurance Organizations

Self- Individual
Partnership
Insurance Insurer

Joint Stock Mutual Co-operative

Companies Companies Organization

Lloyd’s State
Association Insurance
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Insurance Organization in Bangladesh

IDRA – Insurance Development and

Regulatory Authority

Private Insurance Govt. Insurance

Life Insurance General Shadharan

Insurance Jiban Bima Deposit
(17) Corporation Bima Insurance
(43) Corporation System
 Questions
• Describe the main kinds of insurance and
examine briefly the nature of risks protected
by each kind of insurance.
• Detail the different kinds of insurance
organizations and illustrate the merits and
demerits of each organization.
• The latest and the oldest form of insurance is
“Lloyd’s one”. Illustrate briefly.

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