The basic need for insurance and pension arrangements stems from personal risk and uncertainty -- and it is not a modern phenomenon. Even ancient civilizations fostered early versions of the concept of the insurance fund, with the grant of pensions in ancient Greece and the formation of burial societies in ancient Greece and Rome. In the Middle Ages it was sometimes possible to secure one's old age with a pension or even to purchase a room at a monastery with board and lodging provided. Marine insurance was invented, in order to help the expansion of trade, and this was followed by the beginnings of life insurance. Inevitably this is partly a book about "firsts".
Of course, the concept of deceit is not new, either. The earliest insurance fraud apparently was attempted in 350BC, when the owner of a ship tried to sink it.
Other examples of early insurance can be found: The earliest insurance policy seems to have been issued in 1350, on a cargo of wheat supplied from Sicily to Tunis. Life insurance goes back at least as far a 1399, when a policy was issued covering someone on a voyage from Barcelona to Italy. Astonishingly, the first occupational pension fund was established as early as 1590, the Chatham Chest, which paid pensions to disabled seamen and was financed by members' contributions deducted from their pay.
There was a great concern about the losses which people suffered in the Great Fire of London and in other fires in towns, and the first British fire insurance company was founded in 1680.
Many believe Napier, the Scottish inventor of logarithms (1614), may have been inspired to do so by studying the properties of compound interest tables. And Scotland provides the source of many a source about the use of insurance: the grant of pensions by Edinburgh Burgh Council in the 17th centuries; the pensions payable by Leith Trinity House in 1747; and, of course, the pioneering pension fund for Scottish ministers' widows (established 1743). Later, some prominent Scotsmen gathered in the Royal Exchange Coffee Rooms in Edinburgh to discuss setting up ‘a general fund for securing provisions to widows, sisters and other female relatives’ of fundholders so that they would not be plunged into poverty on the death of the fundholder during and after the Napoleonic Wars. Scottish Widows Fund and Life Assurance Society opened in 1815.
One might recall that Scotland is the home of Adam Smith, father of capitalism. Today's state of capitalism might, for Smith, demonstrate not the intrinsic faults of the system, but what happens when the moral dimension is neglected. In his 1759 book, Theory of Moral Sentiments, Smith takes on social and moral psychology and sociology: how one might understand how individuals and societies function not in separate compartments, but as parts of a complex whole. One of the key themes of the book is an opposition to the view that all morality or virtue is reducible to self-interest, as if individuals operated in isolation only concerned with their own particular well-being. Failure to craft an insurance approach to our society's medical needs is one such example of moral failure -- we need to look out for one another. When Smith later wrote The Wealth of Nations, he made it clear that the 'wealth' lay in the well-being of the people.
Want to learn more? Read Pensions and Insurance Before 1800: A Social History By C.G. Lewin and look up Adam Smith.
- Posted by Tom/Bluedog