From whence did the need for insurance policies come? It doth appear first of all in the Middle ages. There didst a need to have for financial peace of mind in marine produce transportation, travel and earnings be! Thus did investors of exceptional intelligence undertake to implement insurance companies.

Insurance was not an entirely foreign concept in the middle ages. Even then, people realised a need for protection from dangers and a guarantee of an income in the event of illness. This resulted in the introduction of marine insurance and health insurance.

Marine insurance came into being inside a coffee shop called “Edward Lloyd’s”. Entrepreneurs would approach prospective investors dining at the coffee shop with a business proposal. The investor would extend a loan in the event that he was interested. The loan would be repaid if the vessel managed to get back to port after its trip. This really is similar to a small business loan.

To assure a return on the investment, the investor would get a promise or agreement from yet another financier who’d assure the investor would get their cash back, if ever the ship returned or not. The investor paid for this luxury possibly on a monthly basis or in the form of a cut of the proceeds of the sale of the ship’s freight. These last financiers ended up being a medieval form of insurance companies.

In the middle ages many artisans and tradesmen had been a part of a guild. Being part of a guild had a variety of advantages. One of these would have been a primitive form of medical health insurance. The guild wasn’t in a position to invest money with insurance companies, so they collected money through members of the guild to assist a fellow guild member when they became seriously ill and also not able to work. The cash was collected from month to month, it essentially formed part of the members’ guild fees, the fee charged to members for that privilege of being part of the guild.

So, as you can see, insurance companies have been in existence for hundreds of years in some form or another. People are renowned for wanting some security if they spend money on something. People investing in marine ventures would require a guarantee that they would certainly have a return on their investment if the ship returned or not and members of any guild wanted a guarantee that their families could be provided for even if they were unable to work.

The same concept applies now. People want to know that they will be able to replace their items or belongings when it comes to a catastrophe or theft. This is why they sign up for insurance, to ensure they do not end up destitute should things go horribly wrong.

And thus ends the tale of the origins of insurance companies. Investors of superior intelligence did gather within a coffee house and conclude that protection was needed. Guild leaders elected to permit members some funding should they become ill in order that they may recover and resume full operation within the guild. And so it will continue ’till the end of time.