Origin Of Insurance.
Around 6000 years ago, Babylonians, whose home in the Tigris – Euphrates valley lay at the crossroads of early world traffic, had developed business practices to a high degree. Babylon had become the clearinghouse of trade as all the important land trade routes converged in that territory. From Armenia in the north, China and India in the east, Egypt in the west, caravans came laden with merchandise. Though Babylon built up a great commercial system, and her people were the first to enjoy the fruits of political economy, their territory was surrounded by huge tracts of desert.
The travelers by land were exposed to the risk of robbery, which then was considered not so abominable a means of livelihood and the same view held good for the piracy on the high seas. Besides, during those days, the ships were entirely at the mercy of the winds. Under such conditions, till the goods reached their destination, the consignor was constantly worried about its safety.
In fact, many traders could not meet the obligations of the principals and, as per their contracts, were forced to become slaves along with their families. Human ingenuity was set to work and, in course of time, a practice developed that debt of the trader, both principal and interest, should be absolved if certain specified contingencies occur.
Research scholars claim that insurance was known and practiced in India even during the ancient Vedic times. Manu the ancient scholar and lawgiver enjoined that a special change be made on goods carried from one place to another to ensure their safe carriage, until it was finally handed over to the consignee at the destination.
Recorded evidences testify that ancient India was a prominent maritime power. There were busy seaports on the west coast at Broach, at Kaveripumpatnam in the south and Banga in the east. Traders expressed difficulties in realizing money for the goods sent abroad. Loans were advanced to traders at specified rates of interest depending on the risk run and the duration of time for which money was required. Men skilled in sea voyages worked out risk premium rates.
On successful conclusion of the voyage, the borrower returned the loan along with interest, when the eventuality insured against did not materialize but it often happened that he was unable to deliver the goods in sound condition at the time and place specified or if he was robbed, he was absolved of his liability.
If the cargo was lost due to the negligence of the crew, the loss was to be borne by all the crewmembers, but when loss was caused by God, the members of the crew were not held responsible. A carrier who failed to reach the destination, could not claim freight, but was exempted from responsibility if loss was occasioned by an act of God. If the loss was due to “Piracy”, the cashier was not protected.
Mark Twain, the great American humorist said in his speech on Accident Insurance,
“ There is nothing more beneficent than accident insurance. I’ve seen an entire family lifted out of poverty and into affluence by the simple boon of a broken leg. I’ve had people come to me on crutches, with tears in their eyes, to bless this beneficent institution. In all my experience of life, I have seen nothing so seraphic as the look that comes into a freshly mutilated man’s
face when he feels his vest pocket with his remaining hand and finds his accident ticket all right.”
We live in exciting times with changes and upheavals all around. New technologies, new inventions and changes in the economic and financial scenario, all have thrown up new insurance needs; needs never felt or heard before. This type of evolutionary process, in the last few decades, has given hope to new types of need-based insurance covers; public liability insurance, product liability insurance, indemnity for medical practitioners for negligence, indemnity for chartered accountants and auditors for professional lapses, etc. Further, covers are engineering insurance, erection insurance, loss of profit, cover against atomic radiation and space travel and contracting AIDS.
We have had bizarre insurance covers. Lizza Minnelli the singing sensation had insured her voice and so have Boy George and Michael Jackson. Mariene Dietrich and Betty Grable, Hollywood’s leading ladies have insured their legs. A well-known comedian in the USA had a policy insuring those in his audience, against anyone dying of laughter after hearing his Jokes!
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