Insurance Company Through History
A Insurance Article Contributed by Shobha Cutting
The Insurance Company in History
The insurance company has been present in its rudimentary forms, as an institution to protect against risk, for thousands of years. The early sailing merchants, the Greeks and the Romans of the middle ages had their 'benevolent societies', which took care of families of sailors and funeral expenses of members upon death. Lloyds of London are an example of how the insurance company developed. The business began in Edward Lloyd's coffee house around 1688.
While Lloyd was only the proprietor, his establishment was a popular place for sailors, merchants, and ship owners and Lloyd catered to them with reliable shipping news and a variety of services. The shipping industry community frequented the place to discuss insurance deals among themselves. The insurance company became much more organized and sophisticated in the post- Renaissance period and specialization developed.
As time went by, the insurance company and, in fact the industry, became specialized and catered to a specific type of risk - to each his own. Also, government regulations came to regulate certain aspects of the business of the insurance company. The 20th Century saw a bit of deregulation in the insurance industry and certain financial companies such as banks, also began to offer services of an insurance company.
Business of an Insurance Company
The insurance company provides protection against financial aspects associated with specified risk(s) or uncertainty/ uncertainties up to a specified limit, while accepting a fixed amount of cash as premium in return. This mutual obligation of the insured party and the insurance company is usually in the form of a written contract. Another form of business provided by many insurance companies is Annuities.
An annuity is a series of fixed payments, which might be over a fixed number of years, over the lifetime of an individual, or both. In this contract, the annuitant pays the insurance company a lump-sum amount or installments over a number of years, called premium, in return of a fixed periodical payment by the insurance company for the rest of the annuitant life. The most common use of annuities is to provide a pension for people in retirement.
The business of insurance is to determine the probability of a certain occurrence in a given set of circumstances and the likely financial loss in the event of that occurrence. Hey determine a premium chargeable which will enable them to underwrite the losses in the event of the occurrence materializing.
Today insurance companies specialize and provide protection in respect of all kinds of uncertainties. The prominent among them are;
Automobile insurance, Property insurance, fire insurance, flood insurance, earthquake insurance, home insurance, Casualty insurance, Financial loss insurance, Health insurance, and Life insurance, among others. Almost all types of risks can be insured against today.
Classification of an Insurance Company
Depending on the kind of business, an insurance company can be classified as one of the following;
1. Life Insurance Companies, who sell life insurance, pensions, annuities and such products, and,
2. Non-life or general insurance companies, who sell other types of products.
Companies may sell both life and non-life products.
