(1) A human being, an animal, a building, a piece of machinery or equipment or furniture, or any other material item, including money, is constantly exposed to danger of some kind, need to protect our life by Insurance. A person or animal might suddenly die or be injured in an accident. A piece of equipment or furniture might be broken, damaged or destroyed by fire or by water. Money, stocks of goods or other valuable items might be lost or stolen. The very large number of dangers which can do harm to humans, to animals and to non-living things - and which can result in losses - are called risks. Insurance is concerned with risk, and its primary purpose is to eliminate or to reduce the harmful effects of risk.
(2) Most of the people and most organizations need some sort of protection, in every kind of society – or cover- against losses or the harmful effects or consequences of losses. There might be exceptions, such as devoutly religious people who take vows of poverty and chastity, and who as a result have no property and no dependants. But all other people and all organizations have possessions or potential losses and Liabilities which need to be protected.
(3) Contracts of Insurance Companies, only one way in which people can guard against misfortune. Some tribal societies, for instance, developed systems of ‘mutual’ aid or help to their respective “members”. If one member suffered a setback - such as the loss of a hut by fire or the loss of cattle - the other members would act together to repair the damage, restore or rebuild the hut, or to search for or even replace the lost animals. Such mutual aid does not work well unless all members of a community are exposed to roughly the same risks, and will be unfair if some members have the potential for greater and more frequent losses than do other members. The need will then arise for a more equitable or fairer system, such as is provided by Insurance.
(4) Insurance developed in the distant past when societies found themselves unable to support trading and manufacturing activities which involved risks of significantly increased size and/or frequency of losses. Just as the ancient civilizations of the past: the Sumerians, Egyptians, Greeks, Romans, Chinese’s and others, could not gain empires and “greatness” without what we would recognize as bankers and banking services, so too did they need what we would today recognize as Insurers and Insurance cover. For example, what we today call “marine insurance” was developed some 3,000 years ago by a race of people called the Phoenicians, who were great seafaring traders, around the Mediterranean Sea in particular.
(5) Many other types of Property Insurance date back to the Industrial Revolutionin Britain, with its growth of manufacturing enterprises using comparatively expensive buildings and machinery and employing mass-production techniques. For example, private Property Insurance (initially to protect against damage by fire) did not appear in England until after the “Great Fire of London” in 1666 AD, which destroyed a large number of buildings.
(6) The “roots” of modern-day Insurance principles and practice extend back over thousands of years. They have been developed, modified, codified and honed over many years, both in the light of experience and also to meet prevailing circumstances from time to time in different countries or regions of the world. Some countries have developed their own principles and practice of Insurance independently, without “outside” influences. In other countries the principles and practice of Insurance reflect past influences from evrey countries, although those might have subsequently been modified in the light of national needs or circumstances.
(7) But the world of the 21st Century is “shrinking”; international trade and “globalization” are the order of the day. More and more the need arises to “standardize” insurance practice, if not even some longhead principles, between different countries. Similarly, computerization, rapid communications, the Internet, and new marketing methods have enormous impact on insurance practice in many countries. It must also be borne in mind that new Statutes or Laws are enacted by the parliaments or other legislatures of various countries from time to time, whilst older Statutes are amended or abolished.
(8) Rules and regulations relating to Insurance business in different countries also change over time. In no way can Insurance in practice be seen as being “static”; it is constantly adapting and evolving to meet changing circumstances and customer demands. And it is customers who pay for insurance cover, so their attitudes towards and requirements from Insurance are very important.
