Life insurance contracts, life annuities, and an array of transactions relating to estates and inheritances are contingent on lifespan. It would make sense that some method of valuing these life-contingent transactions would have been formulated long ago, even in the absence of good demographic data. As it happens, life annuities were common in ancient Rome…
The first insurance companies were launched in the 18th century, the first reinsurance companies in the 19th, and the first insurance-linked securities in the 20th. This steady development in the insurance market helped make property and casualty insurance universally accessible and competitively priced. It has also reduced the riskiness of insurance operations, bringing stability and…
Insurance companies have decades or even centuries of experience insuring against many perils, from storms to fires. But some risks are harder to insure against than others. Some perils occur too infrequently to have high confidence in any calculated probability of occurrence. Others can cause extremely extensive damage when they do occur. Still other perils…
The government in Germany is said to have created the first welfare state in the 19th century, built around social insurance schemes protecting against sickness, workplace accidents, and other hazards. In Britain, the government began building its own welfare state a few decades later, organizing it around principals of insurance as well. However, the British…
Insurance works courtesy of the law of large numbers. Every year, some number of homes burn down and some proportion of cars crash and these events may be unpredictable to any one insured person. To an insurer though, the occurrence of such mishaps across their portfolios is actually quite predictable. However, insurers also have a…
Marine insurance is one of the oldest forms of insurance. In Europe, it traces its history to the Late Middle Ages and even predates life insurance, at least in continuous widespread use. In the 17th and 18th centuries, the insurance industry became increasingly sophisticated and even recognizable to modern eyes. Insurance marketplaces were formed, like…
Governments had to come to the rescue of many firms during the 2007-09 financial crisis and one of the largest rescues was that of American International Group (AIG). Unlike most of the other firms teetering on the brink, AIG was an insurance company and not a bank. It was also a particularly international firm; not…
The 18th century was a formative one in the history of insurance. In Britain in particular, insurance was increasingly being sold by specialized firms, rather than by underwriters operating independently or in syndicates. In this way and others, over the course of the century, the industry developed to become more recognizable to modern eyes. In…
Among the most dramatic and controversial economic transformations pursued in any country was that launched in Chile after the 1973 coup that brought General Augusto Pinochet to power. The civilian administrators he entrusted with the nation’s economy went about turning it into a neoliberal experiment. Their reforms included a restructuring of the country’s dated pension…
Insurance is easily imagined as a stable and delightfully boring industry but it is hardly so, certainly for property & casualty insurers who stand exposed to extreme events, natural or man-made, threatening them constantly with the threat of losses. Surely life insurance would be a calmer business. However, that industry too is still exposed to…
Projects of immediate national significance, even when privately owned, are infrequently left to their own management and their own devices. Acceptance of government regulation in exchange for subsidies or other concessions usually constitutes the manner in which such projects get off the ground, especially for those that attempt something never done before. Private entrepreneurship, critical…
Lloyd’s of London, one of the oldest continuously operating financial institutions around, faced profound troubles just thirty years ago, financial challenges that threatened to discredit or destroy it. The eyes of its regulators, customers, and thousands of member underwriters were on Lloyd’s. In recent years, banking firms in distress have created ‘bad banks’ to separate…
