Page 78 - #letter to son

#SangamNiti DUSK DIARIES
distorted to an industry that perpetuates fear. It mongers the notion of
misfortune befalling on the uninsured. Rather than offering protection,
it confuses the senses with regards to an impending disaster.

But the idea of insurance was not this when it took root.

The earliest traces of insurance was a primitive form and primarily
developed by shipping companies since seafaring cargo was often lost
or damaged or stolen by pirates. So to minimise this ‘risk’, the initial
methods of diminishing it involved either the pooling of risk or
transferring it to moneylenders or expedition sponsors. With waterways
emerging as the most economical transport, maritime trade took-off in
a big way. However, the fact remained that if disaster struck a vessel, it
could put its owner out of business. So, aggregating the risk amongst
all shippers was thought to be an efficient way to ensure business
sustainability even in the face of catastrophes.

As knowledge of the trade grew, yet another means of optimising risk
emerged – risk transference to moneylenders. Under this agreement, if
the cargo was lost, moneylenders would forgo the loan amount. With
ships considered to be ‘assets’, owners would pledge either their vessels
or the cargo as collateral for mobilising loans at lower interest rates.

With the emergence of marine insurance by the British-dominated
maritime trade, which flourished on its colonisation ambitions, it
was only natural that Great Britain become a marine insurance hub.
Interestingly, as groups of underwriters of risk discussed terms in the
coffee houses of London, one specific coffeehouse owner, Edward Lloyd,
became the go-to source for information regarding all things shipping,
which subsequently became Lloyd’s of London that is today an iconic
global insurance hub.

The backstory of the life insurance industry is as interesting. Way back in
2500 BC, Egyptian stonemasons pooled their money to fund the burial of
their brethren. This trend caught-up with the Greek and the Roman altruistic
societies that offered to provide for the burial expenses of their members and
also for the living expenses to widows and orphans of the deceased members.

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