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Chapter 2

Evolution of

Insurance

Evolution of Insurance

• Earliest form of insurance; marine trade loans or carriers contracts.

• Evidenced in Babylonia and India.• In Rigveda [the most sacred book of India],

reference were made to the concept of “Yogakshema”.

• “Hummurabi” and of “Manu” shows sharing of losses in several codes.

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Evolution of Insurance

Insurance

FireMiscellaneou

sLife

Marine

Marine Insurance

• The oldest form of insurance. • Under Bottomry Bond, the system of credit and the

law of interest were developed based on a clear appreciation of the hazard involved.

• If a ship was lost, the loan the loan and interest were forfeited.

• Travelers by sea and land water were very much exposed to the risk of loosing their vessels and merchandise because the piracy on the open seas and highway robbery of caravans were very common.

Fire Insurance

• Originated in Germany in sixteenth century. • After the great fire in England in 1666 when the fire

losses were tremendous. About 85 percent of the houses were burnt to ashes and property worth of 100 million pound sterling were completely burnt off.

• In 1681 the Fire Insurance Office established in England.• “SUN FIRE OFFICE” was a successful fire insurance

institution.• In India, General Insurer started working in 1850 with

Triton Insurance, Calcutta.

Life Insurance

• First appeared in England in 16th century.• The first recorded evidence in England being

the policy on life of William Gybbons on June 18, 1653.

• First registered office of “Hand-in-Hand Society” established in 1696.

• The famous “Amicable Society” for a Perpetual Assurance Office” started its operation in 1706.

Miscellaneous Insurance

• With the industrial revolution in England in the 19th century many forms of insurance took place in the present world. – Accident insurance– Fidelity insurance– Liability insurance– Theft insurance

• Lloyd’s Association was the main functioning institution.

• "The world's specialist insurance market"

• Type Insurance market• FoundedLondon, England

1688; 326 years ago • Founders Edward Lloyd

HeadquartersLloyd's building, Lime StreetLondon, United Kingdom

• Key peopleJohn Nelson (Chairman)Inga Beale (chief executive officer)

• Websitelloyds.com

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Kinds of Insurance

Business Point of View

• Life Insurance • General Insurance • Social Insurance

Risk Point of View• Property Insurance

– Marine– Fire – Miscellaneous

• Liability Insurance • Other

– Personal– Property – Liability – Guarantee Insurance

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Kinds Of Insurance From Risk Point Of View

Personal

•Life •Accident•Health

Property•Marine •Fire •Automobile •Livestock •Crop •Machinery •Theft

Liability•Third Party•Employees •Motor •Reinsurance

Fidelity •Fiduciary •Credit •Privilege

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Types of Insurance OrganizationsSelf-

InsuranceIndividual

InsurerPartnershi

p

Joint Stock Companies

Mutual Companies

Co-operative Organization

Lloyd’s Association

State Insurance

Insurance Organization in Bangladesh

IDRA – Insurance Development and Regulatory Authority

Private Insurance

Life Insurance

(17)

General Insurance

(43)

Govt. Insurance

Jiban Bima

Corporation

Shadharan Bima

Corporation

Deposit Insurance System

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Questions

• Describe the main kinds of insurance and examine briefly the nature of risks protected by each kind of insurance.

• Detail the different kinds of insurance organizations and illustrate the merits and demerits of each organization.

• The latest and the oldest form of insurance is “Lloyd’s one”. Illustrate briefly.