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Vol. 8 - Issue 3
March 20, 2019


The Wall Street Journal Looks At The History Of Insurance

The Weekend Wall Street Journal is the proverbial box of chocolates.  And imagine my surprise a couple of weeks back when I found this gem – an article on the history of insurance.   

In “Insuring Against Disaster” (February 23-24), columnist Amanda Foreman looks at the history of insurance and goes way, way back – to the Babylonians and the 18th Century B.C. Code of Hammurabi, which, the author says, provided a “primitive form of insurance known as ‘bottomry.’ According to the Code, merchants who took high-interest loans tied to shipments of goods could have the loans forgiven if the ship was lost. The practice benefited both traders and their creditors, who charged a premium of up to 30% on such loans.  The Athenians, realizing that bottomry was a far better hedge against disaster than relying on the Oracle of Delphi, subsequently developed the idea into a maritime insurance system. They had professional loan syndicates, official inspections of ships and cargoes, and legal sanctions against code violators.”

Interestingly, the article points out that in “Christian Europe, insurance was widely frowned upon as a form of gambling—betting against God. Even after Pope Gregory IX decreed in the 13th century that the premiums charged on bottomry loans were not usury, because of the risk involved, the industry rarely expanded.”

It’s an interesting article and one worth checking out.  
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