Task 1. Read the text “History of Insurance” and translate it.

Date: 2015-10-07; view: 410.

UNIT 5

Task 2. Find answers to the following questions in the text and write them down:

· What did Chinese merchants do to limit the risk of losing their goods?

· What was recorded in the famous Code of Hammurabi?

· What did the concept of ‘general average' imply?

· What did Greeks and Romans introduce?

· Why was there demand for marine insurance in London?

· What was Lloyd's coffee house famous for?

· When and where was insurance as we know it today introduced?

· What was Franklin's contribution to the history of insurance?

HISTORY OF INSURANCE

Early methods of transferring and distributing risk were practiced by Chinese and Babylonian traders as long as the 3^rd and 2^nd millennium BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1759 BC and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.

A thousand years later, the inhabitants of Rhodes invented the concept of the ‘general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organised guild called ‘benevolent societies' which acted to care for the families and funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17^th century, “friendly societies” existed in England, in which people donated amounts of money to a general sum that could be used in case of emergency.

Separate insurance contracts (i.e. insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14^th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles first proved to be useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe and specialised varieties developed.

Toward the end of the 17^th century, the growing importance of London as a centre for trade led to rising demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house which became a popular haunt of ship owners, merchants and ships' captains and thereby a reliable source of latest shipping news. It became a meeting place for parties wishing to insure cargoes and ships and those willing to underwrite such ventures. Today Lloyd's of London remains the leading market for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster Nicholas Barbon opened an office to insure buildings. In 1680 he established England's first fire insurance company, “the Fire Office”, to insure brick and frame homes.

The first insurance company in the United States provided fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.

Benjamin Franklin helped to popularise and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazard, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses.