A History of Insurance (part 1)

Although the insurance policy as we know it is a relatively recent development, the concept is by no means new. The idea of transferring the risk of loss from an individual to his group began thousands of years ago. When a family’s hut burned down, for instance, the entire tribe would rebuild it. Traces of rudimentary insurance practices are still seen among the few primitive tribes that exist today (Raynes 1948: 71).

About 2500 BC, Chinese merchants were using primitive forms of marine insurance (Ibid.: 32). When boat operators reached river rapids they waited for other boats to arrive, before redistributing the cargo so that each boat carried some of the contents of the others. If one boat was lost navigating the rapids, all the operators shared a small loss but nobody had their entire cargo wiped out (Rahman and Gad 1978: 32).

Benevolent societies were developed in Egypt as early as 2500 BC. There is evidence that the ancient Egyptians had writings on the walls of some of the temples in Luxor (Upper Egypt) and that they formed committees for burying the dead. They believed that life after death was inevitable and therefore the body should be preserved for the spirit when they were reunited at the time of reincarnation. That led them to spend prodigiously when death occurred and
even before that to build tombs suitable for the preservation of the body. Therefore the committee spent the money needed to preserve the body after death for as long as that person or his relatives paid an annual fee. This annual fee could either be in the form of agricultural produce or manufactured goods and clothes, sufficient to ensure that the body would be preserved in a wellsealed tomb (organized primarily for religious and social purposes in the
hereafter). However, members contributed to funds that paid burial expenses and gave aid for those seriously ill or injured by accident (ibid.: 32).

the dead. They believed that life after death was inevitable and therefore the body should be preserved for the spirit when they were reunited at the time of reincarnation. That led them to spend prodigiously when death occurred and even before that to build tombs suitable for the preservation of the body. Therefore the committee spent the money needed to preserve the body after death for as long as that person or his relatives paid an annual fee. This annual
fee could either be in the form of agricultural produce or manufactured goods and clothes, sufficient to ensure that the body would be preserved in a wellsealed tomb (organized primarily for religious and social purposes in the hereafter). However, members contributed to funds that paid burial expenses and gave aid for those seriously ill or injured by accident (ibid.: 32).

Also read: A History of Insurance (part 2)