The history of insurance is remarkably interesting. While gambling on risk dates back to ancient civilizations, most insurance wonks consider the introduction of “modern” insurance to date to the late 17th Century at Lloyd’s coffee house. Of course, if you ask some Florida homeowners, not much has changed in the last 300 years: It can still take months or years for an insurance company to pay a claim.
Those first insurance underwriters were gambling on shipping, a very risky business in 1688. It would be decades before John Harrison came up with a method to measure longitude accurately. Without that measure, ships foundered on reefs and along coasts with alarming regularity. Vessels, cargo and human lives — the losses were staggering. The situation had improved dramatically by 1912, when Titanic went down: Only about one ship out of every 100 was lost. (Now, it’s about one in 670.)
In the days before steam and the telegraph, insurance companies were reluctant just to take someone’s word for it that a ship had gone down. The rule in the age of sail was “a year and a day” — that is, no one could file a claim until the ship was a year and a day overdue. In most instances, though not in the U.S., it was up to Lloyd’s to decide that a ship was lost.
By the time Titanic went down, the system had evolved. Advances in technology saved lives, and survivors could attest to the loss of the ship and its contents.
In our next post, we’ll discuss the claims process for Titanic.
Source: New York Times, “Titanic insurance claims quickly met,” April 28, 1912Share