The first ever insurance policy was flexible
Sat at home on a Saturday afternoon, out of curiosity I began to research the history of insurance. The earliest methods of risk distribution are attributed to Chinese and Babylonian merchants in the 3rd and 2nd millenia BC.
The Code of Hammurabi, in which the Babylonian rule of law was laid out, specified the foundations of personal and commercial law. The code, which dates from around 1750 BC, outlined a basic insurance for loans that merchants used to secure ships. They would pay the lender an additional sum in exchange for a guarantee to cancel the loan in the event their shipment was stolen or lost at sea.
This agreement, widely thought of as the earliest documented form of insurance, allowed merchants to travel further afield than ever before and empowered them to take calculated risks to bring a wider variety of goods back to port. It meant that those first merchants could sail into the unknown and trade with other nations. It matured import and export activity for the Babylonians. But fundamentally, it established the mechanism for international trade.
But what strikes me as particularly interesting when I reflect on these first insurance policies is that they were structured per shipment. If you were shipping something from point A to point B, you were insured only for that particular period of time.
What this means is that the very first insurance policies that were sold were in fact flexible policies, purchased per shipment.
From there onwards, it has been largely uphill for insurance over the course of several thousand years. The demand for insurance has increased hugely, and it has grown both in terms of the number of people who require it and in its complexity as well. In order to cope with the increasing demand, more standardised policies have been designed over time.
As a result, individual requirements have been compromised for the sake of wider accessibility, which has been achieved through bundling together components into generalised policies. Although these are sufficient for customers, they are far from being ideal. The infrastructure to support the needs of individuals was simply not in place. Instead of empowering people, like the Babylonian merchants who travelled across the seas, insurance has become something that is often perceived as a tax and a burden.
However, with the technology that we at Zego have worked so hard to build, we have the capacity to provide flexible insurance policies. It is through this flexibility that we can provide insurance that works for businesses and professionals rather than against them, by providing them with access to policies ranging from a single minute to a full year.
Insurance has been moving against customer needs for a very long time. Thousands of years, even. But by creating insurance policies that suits the needs of customers, we can help to change the way people think about insurance.