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During the Enlightenment period in Europe, insurance became much more complicated due to the development of specialized contracts and insurance varieties. The Great Fire of London (1666), which ruined more than 13,000 homes and buildings, resulted in what we know today as property insurance. The fire’s massive devastation forced the development of insurance from a matter of convenience to one of urgency. Because of this, Sir Christopher Wren, one of the most acclaimed English architects in history, included a site for the ‘Insurance Office’ in his new plan for London post-Great Fire in 1667.
The development of insurance also provided ample business opportunities.
In 1681, economist Nicholas Barbon and his associates created the first fire insurance company called the “Insurance Office for Houses.” His new insurance company initially provided insurance to around 5,000 homes. Around the same time, the first insurance schemes for businesses also became available.
Right around the tail end of the 17th century, London had become a vital center for trade, resulting in the skyrocketing demand for marine insurance.
During the 1680s, a man named Edward Lloyd opened a coffee house. His shop became a meeting place for personalities in the shipping industry who wished to ensure cargo and ships, as well as insurance providers who took advantage of the opportunity. These informal beginnings resulted in the establishment of the insurance market that came to be known as Lloyd’s of London and several related shipping and insurance businesses.
Life insurance was first offered early in the 18th century by the Amicable Society for a Perpetual Assurance Office, founded by William Talbot and Sir Thomas Allen in London in 1706. The Society for Equitable Assurances on Lives and Survivorship was then established by Edward Rowe Mores in 1762. Edward Rowe Mores’ company was the world’s first mutual insurer, pioneering age-based premiums based on mortality rate, which laid the framework for scientific insurance practice and development. His model became the basis for modern life insurance.
Accident insurance first became available late in the 19th century. The Railway Passengers Assurance Company, formed in England in 1848, was the first company to provide accident insurance after the steady rise of fatalities on the nascent railway system.
During the late 19th century, governments started introducing national insurance programs against sickness and old age. Germany developed its system based on welfare programs in Prussia and Saxony from the 1840s.
In the 1880s, Chancellor Otto von Bismarck introduced old-age pensions, accident insurance, and medical care. These programs became the foundation for Germany’s welfare state. In Britain, the Liberal government introduced more extensive legislation through the 1911 National Insurance Act. This provided the first contributory system of insurance against illness and unemployment that catered to the British working classes. After the Second World War, the contributory system was expanded to form the first modern welfare state.”
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