From Babylonia to car insurance

Car insurance seems to be one of the most promoted services around, especially when compared to other insurance products, such as home insurance or life insurance.

It is almost guaranteed that whilst enjoying an evening of TV we will see at least one car insurance company advertising its cheap rates and superior cover. Hastings Direct, Direct Line, Esure and Sheilas’ Wheels are all extremely familiar names, mostly due to their TV advertising campaigns.

Even when we go online, it is hard to ignore the advertising which so many motor insurance firms use, not to mention the fact that typing in “car insurance” to Google UK nets a massive 3.1 million results.

As a result of this high level of promotion, most people are fairly comfortable with how car insurance works and this understanding is growing all the time as consumers search for the cheapest motor insurance quotes. We can quite honestly thank the car insurance industry for making insurance accessible for the modern public.

Our familiarity with car insurance makes it almost difficult to imagine a time when people hadn’t heard of it, although really it was not that long ago.

A history of insurance

Although there is no record of the term “insurance” being used before 1545, the idea itself is ancient. It can be traced back to as far as the 3rd millennia BCE, perhaps even further in other cultures.

One of the first discernable instances of a property insurance-type product being used was in 2100 BC in Babylonia. This saw the Code of Hammurabi make it law for traders to assume some of the risks of a caravan whilst it was travelling. This came in the form of a loan which was repaid with interest if the journey was completed successfully. This was commonly used in the sea-faring trade by several Mediterranean-based cultures, as travelling by boat was fraught with danger from pirates and storms.

Later, benevolent societies were formed in Roman and Greek civilisations. People donated to these organisations and, upon death, their families were given money for funeral expenses. This was the first incarnation of life and health insurance and a very similar system was later seen in UK guilds during the Middle Ages.

The first proper standalone insurance contract is believed to have been invented in 14th century Genoa. This saw the separation of insurance from investment, a move which opened up all kinds of possibilities for insurance in the following centuries. It also gave rise to the term ‘underwriter’, which described someone who signed their name under the text of an insurance agreement.

In 1666, the Great Fire of London occurred. This highlighted the desperate need for fire insurance, something which had previously not been considered. Shortly after this, the first fire insurance company was set up, aptly named The Fire Office.

Just over a century later, Norwich Union opened its doors as a fire insurance firm. This makes it the oldest surviving insurance company in the UK, with more than 300 years of history. Since its inception, it has also branched out into most other areas of insurance, from marine insurance to life insurance.

As seen in Norwich Union’s history, the following centuries saw insurance products become more specialised, and when more people began driving cars, it was only natural that they would wish to protect their property’s considerable value with car insurance. One of the earlier provides of car insurance was the AA, which sold its first policy back in 1907.

1930 saw the introduction of compulsory car insurance, which meant that every driver on UK roads must be covered by at least third party car insurance. This law, combined with a growing number of car drivers, provided the opportunity for more motor insurance companies to start up in the UK.

This brings us back to the current day, where there are a wide variety of car insurance policies offering different types of cover. As well as third party, third party fire and theft and comprehensive car insurance, we are now seeing products such as women’s car insurance, eco-friendly car insurance and pay-as-you-drive car insurance.

No doubt the future holds an even more diverse selection of car insurance policies which can be accessed through a variety of media, but we shall just have to wait and see.