A History of Insurance: from Pirates to Providers

A History of Insurance: from Pirates to Providers

When the pirates landed they were often disappointed by the booty.  Along with Captain Jack Sparrow they were always yelling, “Why is the rum always gone?”  Set up in 1513 as a military outpost to protect shipping interests in the region, St. Augustine, Florida is the oldest European city established in the United States.  As with any maritime trading, the need for this outpost came because of the frequency of pirates raiding ships.  For the first two hundred years the little inlet city in Florida was quite the hot spot of conflict with pirates, Spain and England competing for the area.  Merchants were pulling gold and other New World goods out of the region and shipping it back to their different markets.  But how did these different markets protect themselves against the risk?

Risky Business

Today if we live in St. Augustine, we may check out a website or call someone to get Florida insurance quotes, but these companies weren’t always a bedrock institution in a culture.  Insurance, as a concept, reaches all the way back to the Chinese and others who first discovered the sea as a conduit for moving goods and services.  Insurance at its core simply means that a person wants to reduce the risk.  So for the Chinese and others when multiple ships were used, they would simply try to spread the more valuable assets across their boats so that if a pirate or accident sunk one ship, they didn’t lose all the precious cargo.  Well soon enough people who wanted to sponsor a shipment of goods wanted some wanted some way to mitigate lost money if the ship sunk. That led to financial backers loaning the money on a voyage as long as they got a fee or premium on the loaned money.  In fact Lloyd’s of London, although not an insurance company, traces its roots back to a coffee house opened by Mr. Lloyd in the late 1680’s.  Frequented by merchants and seamen, it became the best source for shipping news and deals were often struck over a cup of Joe.  In fact the term underwriting came directly from Lloyd’s where the backer’s literally wrote their name under the risk information on a form Lloyd’s generated for these transactions.

Accidents and Acts of God

But what if the person in St. Augustine calls for Florida insurance quotes just had an accident?  Other people took on ways of trying to help their fellow men when it didn’t have to do a shipping voyage.  Sometimes it has been through governmental intervention.  Other times it has been through commerce.  Ancient monarchs would receive gifts of tribute from all of their tribal groups in their confederation.  A specific gift of more than 10,000 gold pieces would be registered in the treasury from each tribe.  It was important for each of these tribes to make this donation because if something went wrong in the tribe and they needed help, their representative would approach the monarch about lending aid to cover the damages.  If their name was in that register, then the monarch would help.

But in more modern times the same person in St. Augustine asking for Florida insurance quotes would have to look back to London again in the late 1600’s.  Due to the Great Fire of London of 1666 an enterprising merchant names Nicholas Baryon took it upon himself to insure buildings against loss.  This was England’s fire insurance company.

Whether it was the ancient monarch or Nicholas Baryon the way insurance operates is to generate a large amount of capital reserves to draw against in the event of a loss due to accident.  Insurance companies have developed huge reserves in order to help out their clients in an accident.  Especially now, however, they still fall under the bounds of a contract and are governed by specialized legal situations. At a base level an act of God speaks to an impossible event that occurs, not allowing one party to fulfill their end of the bargain.  For instance if a car dealer promises to sell a customized car to a client, and the next day a tornado rips through the area, the car dealer may argue that the tornado made that impossible and can they legally be let out of the deal.

Insurance companies, like Floridainsurancequotes.net, make these impossible events their business on a limited basis.  Fire insurance, which is many times deemed an accident, spread to other types of natural disasters like flooding and crop failure.  Within their structured rules modern companies have written policies to help protect people’s property in the event of one of these events occur.  Many times, however, these are specialized insurance policies that have to be purchased outside a person’s normal homeowner’s coverage.

Just for the Health of It

So now the St. Augustine person has a sniffle and starts calling for Florida insurance quotes?  Where did that start?  Chancellor Otto von Bismarck of Germany popularized plans that offered accident, medical and life coverage for different workers. This was the precursor to many of the governmental expectations of insurance among our modern systems in Europe and the U.S.

Like many other systems, however, these first started out as mutual aid societies where everyone pitched in. In 1887 some African-American workers in Iowa all donated a dollar toward a fund where they all worked in a company town.  Members could access the fund for medical needs. The larger system we know now developed when individual hospitals offered the same model by letting consumers pre-pay into a fund in the event they needed help.  That has expanded into our current model of using a network of providers for our various health needs.  So from pirates to providers, we all use insurance for a variety of reasons.  Hopefully you find the services you need.