The birth of modern insurance The Age of Reason or Enlightenment o means of communication within the the 17th and 18th centuries provided the economy and contributed to more and grounds for accepting actuarial science more problems being expressed in terms s a rational means to conduct bette of costs and time business Insurance, and especially life insurance resonated with the search Not all cultures adopted such thinking for laws, the statistical recording of natural from the start. In Southern Europe. it took vents and the calculation of future a catastrophe to change the perception developments. Behind this innovation w of risk and the views on destiny. The Great he conviction that the world and its Lisbon Earthquake in 1755 challenged possible future states, could be predicted the traditional interpretation of divine mnipotence. Almost the entire city was Insurance created a vital counter balance to the new and potentially destabilising forces that were transforming the division of labour. urbanisation and the economics of trade Insurance was thus an ideal laboratory municipal buildings, but, much to the for enlightened business ideas. The concern of many survivors, the red-lig process of collecting different types of district was left intact. How could a stitutional and personal information and benevolent God allow this, and why did using underwriting to transform it into an all-powerful God not prevent it? quantifiable costs was important. It created vital counterbalance to the new and Was mankind really meant to take destiny potentially destabilising forces that were into its own hands? Rational thinkers were ransforming the division of labour increasingly seen to be on the winning urbanisation, and the economics of trade. side of the argument, and although the Insurance also helped money become the hquake did not immediately boost the idea of rise to modern seismology. abandoned in the 1840s. In 1868 it collapsed killing eight men and boys. Sugar had become an important catalyst for industrial growth in England. Refining of the raw sugar at plants in Europe was associated with a considerable fire risk. In the second half of the eighteenth century. fires at sugar refineries accounted for a large proportion of all bankruptcies in England Only two of the fire insurance companies at the time also insured sugar refineries, albe at inflated rates and with meagre policy limits in1782 in London founded a joint-stock insurance company. the phoenix. They were the first ones to specialise in insuring large industrial risks and, on the trail of sugar, to deliberately export this modern form of insurance Opposite: The Great Fire swe London fro 2 to 5 September in It destroyed over 0000 homes. al six deaths were ecorded. It did not ng for the first fire insurance company to be established after the SwissSwiss Re A History of Insurance 11 The birth of modern insurance The Age of Reason or Enlightenment of the 17th and 18th centuries provided the grounds for accepting actuarial science as a rational means to conduct better business. Insurance, and especially life insurance, resonated with the search for laws, the statistical recording of natural events and the calculation of future developments. Behind this innovation was the conviction that the world, and its possible future states, could be predicted and computed. Insurance was thus an ideal laboratory for enlightened business ideas. The process of collecting different types of institutional and personal information and using underwriting to transform it into quantifiable costs was important. It created a vital counterbalance to the new and potentially destabilising forces that were transforming the division of labour, urbanisation, and the economics of trade. Insurance also helped money become the means of communication within the economy and contributed to more and more problems being expressed in terms of costs and time. Not all cultures adopted such thinking from the start. In Southern Europe, it took a catastrophe to change the perception of risk and the views on destiny. The Great Lisbon Earthquake in 1755 challenged the traditional interpretation of divine omnipotence. Almost the entire city was destroyed, including churches and municipal buildings, but, much to the concern of many survivors, the red-light district was left intact. How could a benevolent God allow this, and why did an all-powerful God not prevent it? Was mankind really meant to take destiny into its own hands? Rational thinkers were increasingly seen to be on the winning side of the argument, and although the Earthquake did not immediately boost the idea of insurance in the South, it gave rise to modern seismology. Right: The Old Sugar House in Hull had been set up to compete with London refineries but was abandoned in the 1840s. In 1868 it collapsed killing eight men and boys. Sugar had become an important catalyst for industrial growth in England. Refining of the raw sugar at plants in Europe was associated with a considerable fire risk. In the second half of the eighteenth century, fires at sugar refineries accounted for a large proportion of all bankruptcies in England. Only two of the fire insurance companies at the time also insured sugar refineries, albeit at inflated rates and with meagre policy limits. In 1782, eighty-four sugar refinery owners in London founded a joint-stock insurance company, the Phoenix. They were the first ones to specialise in insuring large industrial risks and, on the trail of sugar, to deliberately export this modern form of insurance. Opposite: The Great Fire swept through London from 2 to 5 September in 1666. It destroyed over 70000 homes, although only six deaths were recorded. It did not take long for the first fire insurance company to be established after the catastrophe. Insurance created a vital counter balance to the new and potentially destabilising forces that were transforming the division of labour, urbanisation, and the economics of trade