Other forms of insurance terminology are also derived from ancient practices of Mediterranean commerce. The origin of the word "underwriter," for example, is Italian, from an old system of signing contracts on marine insurance. Those businessmen who had agreed to share in the profit or loss on a certain venture signed their names underneath the contract, writing at the same time the amount of risk assumed by each. It is possible that "policy" is also of Italian origin - derived from "promise" - although other sources have been claimed for this word.
Things changed dramatically in the 17th century. In 1666 the Great Fire of London finally and forcibly demonstrated the need for fire insurance. The primitive fire-fighting methods of the day were virtually helpless against the hungry flames that roared unchecked through narrow streets reducing timbered dwellings to ashes. The Great Fire of London burned for four days and nights. It razed 436 acres, devouring 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public buildings. Only six people perished in the flames, but hundreds died from shock and exposure.
Insurance protection as we know it today can be traced to the aftermath of that tragedy and a man call Nicholas Barbon. Profoundly shaken by the Great Fire, Barbon promptly opened an office "to insure buildings." This venture was apparently successful, because in 1680 he founded a partnership and established England's first fire insurance company, The Fire Office, to insure brick and frame houses.
The first mutual fire insurance company was established in 1696 with the cumbersome name of "Contributorship for Insuring Houses, Chambers, or Rooms from Loss by Fire by Amicable Contributions". This company was highly successful, eventually being absorbed by the Commercial Union Assurance Company, Ltd., of London in 1905. In 1704 the Lombard House inaugurated fire insurancefor household and business goods, and in 1762 the first mutual life insurance company was formed, The Equitable of London.
From this brief accounting of history we can see how insurance came to be.
Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen. However we can be confident that we will be compensated for our loss. Without people wanting to secure their investments and great tragedies throughout history we may not have insurance as we know it today and what a loss of peace of mind that would be.
