Page 2 - M1_Insurance Introduction Notes

equivalent to interfering with divine providence. For

thousands of years, prayers, pilgrimages and donations

outperformed insurance premiums. Indeed, as late as

the 19th century, insuring against death was likely to

arouse controversy among clerics.

But there were acceptable ways of alleviating

losses, such as sharing risks within social and business

communities. Risk mitigation based on solidarity was

widespread among guilds, trade associations, and

village communities.

The first methods of transferring or distributing

risk in a monetary economy, were practised

by Chinese and Babylonian traders in

the 3rd and 2nd millennia BC, respectively. Chinese

merchants travelling untrustworthy river rapids would

redistribute their goods across many vessels to limit

the loss due to any single vessel's capsizing. The

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