Fortius Inter Partes d.o.o. za posredovanje u osiguranju

The history of insurance

The beginning of insurance goes back as far as 3000 BC and is closely linked with the development of commerce and the transfer of goods. The first primitive form of risk distribution was organised in the region around Yangtze river in China, in places where navigation was dangerous. The merchants distributed their cargo between several smaller vessels, thus protecting themselves from a complete loss of goods. In case of a loss, all the merchants involved suffered equal consequences, that is they ceded a part of their merchandise to the merchant who suffered the actual loss.

The first written regulations on the solidary distribution of risk appear in the Code of Hammurabi (Babylon 1700 BC). These regulations were a necessity because cargoes transported through deserts were often attacked by thieves. The same Code contains regulations regarding the responsibility of builders for flawed construction of buildings.

The further development of insurance went hand in hand with the development of seafaring.

Roman law institutes the marine loan which was the sole form of marine insurance up until the 13th century. A ship-owner would take a loan before the ship's voyage and if the ship and the cargo reached their destination undamaged, the ship-owner would return the loan, plus the interest rate which had been determined beforehand.

In the middle ages merchants and artisans were encouraged to organise themselves into guilds so that they could suffer the consequences of potential fire, illness, death and similar misfortunes more easily. This, as well as the marine insurance, is considered to be the beginning of the development of other forms of insurance.

Pope Gregory VII's decision to abolish the marine loan in 1236, since the determined interest rates were perceived as usurious, played a crucial role in the development of insurance.

Fictitious sale contracts have been introduced instead. This meant that a client bought a ship and merchandise before the ship's voyage, but was under the obligation to pay only if both the ship and merchandise reached their destination. The person selling the ship even gave a certain amount of money (a premium) to the  buyer, who didn't have to return it. Precisely these contracts are considered to be the harbingers of insurance in the contemporary meaning of the word.

The oldest known public notary's document regarding marine insurance was found in Genoa. It was issued on October 23rd 1347, whereas the first actual insurance policy was issued in Pisa in 1384.

Dubrovnik has a very special place in the development of marine insurance. The marine insurance law Ordo super assecuratoribus, which is considered to be one of the oldest, if not the oldest legal act which regulates insurance relations, was issued in Dubrovnik in 1686.
The subsequent development of commerce and the shifting of main trade routes from the Mediterranean to the Atlantic have resulted in the formation of new global commercial centres such as England, in particular London, which became the centre for marine trade.

Edward Lloyd, in whose coffee house ship-owners and merchants met and exchanged information in 1686, played an important role in this.

Soon, individual Insurers joined them and started concluding insurance contracts. Individual Insurers were physical persons who possessed a certain initial capital and enjoyed good reputation.

The booming business gradually led Insurers to form associations when assuming greater risks, which in its turn led to creation of first insurance companies.

The foundation of Lloyd's Underwriters Association, that is the association of individual insurers, was of utmost importance in this respect. The company still exists and it represents one of the most important global insurance markets.

The development of life insurance is also closely connected to seafaring.

It is a known fact that the first life insurance contracts were concluded by seafarers so that a ransom could be paid in case of their abduction. The premium for that kind of life insurance was calculated on the basis of the number of their voyages, but their age was not taken into consideration.

Short-term insurance policies were typical for the early forms of insurance, whereas today's insurance contracts tend to be long-term. In order to conclude long-term contracts, the insurers needed the exact appraisal of the likelyhood of death of the insured. The first mortality tables, which became the basis for calculating life-insurance premiums, were created in 1693 solely on the basis of mortality statistics from 1687 till 1691. Soon after, in 1699,  the first life insurance company, The Society for Assurance of Widows and Orphans, was founded.

The development of insurance gained momentum in the 18th and particularly in the 19th century. The actuarial calculations for insurance premiums were introduced and the accompanying legal documents were adapted to this new practice.

Although the first life insurance policy was concluded in 1536, it wasn't until James Dodson that the foundations of modern life insurance were laid.

Insurance in Croatia exists from year 1884, when the insurance cooperative Croatia was founded in Zagreb. The initial capital for the cooperative was deposited by Zagreb city hall as part of its battle against economic dependency on foreigners. Initially, the cooperative dealt with fire insurance in the city of Zagreb and later it expanded its business dealings onto other forms of insurance.