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Considering the current economic and political climate, it seems as though the private insurance model is quickly losing favor while support is being gained for state-sponsored or community-sponsored risk reduction. However, private insurance goes back a very, very long way into our history; starting with the first maritime insurance companies from times ancient to, in the seventeenth century, the first fire insurance business.
Benefits to consumers have been obvious throughout the various incarnations of insurance. Merchants and cargo holders undoubtedly needed the assurance that they would be reimbursed for the loss of ships or vessels in the event of a shipwreck, but it did not stop the tendency for the wealthy to exploit their challenged position by charging a usurious amount. Not surprisingly, many of the early governments’ first business regulations were restrictions on the amounts that could be levied by insurers to cover the costs, and price ceilings were fixed keeping the insurers accountable to the standards.
The first fire insurance company started in 1680, in response to the horrible fire of London in 1666. because the houses were made of wood, not fireproofed, and often contained open hearths, fire was a very great risk, and the market demand was sufficient to support a fire insurance business. Benefits to consumers were recognized quickly, and the model took off rapidly, and even spread overseas.
With the advent of the industrial revolution, new demands quickly sparked interest for different kinds of insurance; no sooner had the first automobile rolled out of the workshop than the first insurance policy for that automobile was sold. Although the model is certainly being called into question with regard to health insurance in today’s society, there is very little doubt that the private insurance model has been a staple, and a necessary one, of businesses throughout history.