The fledgling insurance industry in Cambodia saw premiums increase by more than 14 percent in the first half of last year.
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Huy Vatharo, chairman of the Insurance Association of Cambodia (IAC), says the market is growing rapidly and playing a bigger role every year in the country’s economic development.
From January to June, gross premiums in general insurance reached $49.3 million, a rise of 14.7 percent compared with the same period in 2018, according to Mey Vann, director-general of the Ministry of Economy and Finance.
Life insurance premiums hit $66.3 million, an increase of 55.3 percent, he points out.
Cambodia has 13 general insurance companies, 11 life insurers, and 7 micro-insurance firms, according to a report from the Ministry of Economy and Finance.
So how did the concept emerge?
Risk is a constant part of everyday life and avoiding such situations for the sake of your own or your family’s well-being is practically impossible at all times. This realisation sets into people’s minds quite early in life, and it is one that has been a presence in the consciousness of humankind for ages.
An overview of the history of insurance shows this practice to be a sustainable and long-standing solution to such imminent danger. Over the years, it managed to develop and evolve in order to better suit the needs and lifestyles of the time, providing just the right antidote to respective risks and hazards.
Nowadays, this is one of the biggest industries around the globe, sparking the interest of many as to how it all came about.
Since this earliest age, humans realised the risk involved in hunting wild animals, passing dangerous terrains, or simply living in rigorous conditions and sought to distribute it more evenly, just to make their lives better.
As for those looking to find out the answer to “how long has insurance been around” (in its contractual form), look no further than the Babylonians, and one of the first written laws ever – the Code of Hammurabi. This law contained a clause protecting the rights of merchants against moneylenders as a form of insurance dictated by the state. Should any malady or death fall upon the merchant, their loan would be forfeited rather than indebting their closest family or relatives.
Chinese merchants living as early as 3,000 BC played an equally important part in the history of insurance, having realised the potential of joining forces in their fight against the risks of water transport. Their form of insurance included pooling the risk for the transport of joint cargo, so as to reduce their losses in case things went bad. And with river rapids, pirates and other thieves being a constant menace, it is no wonder the earliest records of such practice date back to the year 3,000 BC.
Early records of insurance in one form or another, such as the ones mentioned above, show that the service as we know it nowadays is an indispensable factor for human civilisation’s survival and prosperity. In this regard, the lengthy period of maritime trade has definitely had a great influence on the different forms of insurance and their development over time.
Hence, the Greeks and Phoenicians are just as vital to any overview of the origin of insurance as any of the rest. Their sea trade was based on contracts between ship-owners or merchants with specific moneylenders – or sponsors, so to speak. The former would likely pledge something of value – the ship or the cargo – as collateral in order to obtain a loan from the latter party.
Respectively, bottomry loans were those that saw the ships used as collateral, while respondentia loans were obtained by merchants who pledged the cargo as collateral. Such insurance worked for both parties for quite some time because it protected the merchants in case of disaster and, at the same time, brought profit to the moneylenders.
What’s more, insurance history records note that it often came down to something more than cash or valuables pooled together. The Amish community is a good example of this; they would actually insure their members on the basis of “joint effort”. More specifically, in cases of certain distress to one member’s property (their house burned down), the rest of the people would all work together to rebuild it. Being a limited and unique example, the Amish community’s type of insurance is still proof of the many different forms of the practice that led up to contemporary practice as we know it.
Artisan guilds also played an important role in the history of insurance, developing one of the key forms of insurance known to this day. The early form of group coverage as they used to employ helped them preserve, protect, and ultimately boost their trade back in the days of the Dark and Middle Ages when craftsmanship was only beginning to rise in popularity.
The guild system had an established practice that protected them from potential risks. Fires were a common disaster, considering the fact that their places of practice were often built out of wood, although illnesses and death were also frequently covered by the system. While they are not officially part of the history of insurance companies, these funds were definitely the closest thing to them that people had back in those days.
Say, for example, a master’s practice burned down – the guild would invest funds from its coffers in order to restore it. Alternatively, if they were robbed or had fallen ill, the same funds would go towards boosting the business until it got back on its feet again. Support was also provided to the families of deceased guild members, showing some of the earliest records of this occurring in the history of life insurance policies.
This practice turned out to be rather beneficial – both for the craftsmen and the craft. After all, the advantage of having some kind of support in case of accidents drew many people away from farming and boosted the trade of goods and services through their growing availability on the marketplace.
Still, when it comes to its rise as an industry, the history of insurance finds its place of origin in the coffeehouses of London. These were originally known as the unofficial stock exchange of the British Empire, which was the driving force of commerce and maritime trade back in the days of colonialism.
Ship-owners, merchants, and others would come in the coffeehouses, looking for information and insurance for their prospective voyages. A frequented destination was the coffeehouse of one Edward Lloyd, later becoming a company that exists to this day – Lloyd’s of London. It was the first insurance company ever in Great Britain to provide maritime insurance for ships dealing with the slave trade, retaining its monopoly late into the 19th century.
Its daily practice consisted of sharing valuable information with its clients, merchants and ship-owners and finding venture capitalists that would fund their colonial voyages. These venture capitalists would provide people interested in being colonists and also buy the provisions for the journey – the first of its kind in the history of insurance. In return, it would get a portion of the cargo brought back from the New World explorations.
Once it became clear that such valuables weren’t all that easy to find, it started accepting shares of tobacco, the new bumper crop. Afterwards, Lloyd would seek out potential investors and underwriters. These would share the risk of the voyage by taking responsibility for portions of the cargo with a signature under the entire list.
The first insurance company issuing fire insurance also originated out of these coffeehouses, prompted by the fires that burned down about 14,000 buildings in London in 1666. They came only a year after a plague had massacred the London population, making everyone take these risks that more seriously.
It was around that time – more precisely in 1654 – that Blaise Pascal and fellow Frenchman Pierre de Fermat had developed a mathematical equation that included probabilities. It helped calculate mortality rates and led to the actuary tables used even nowadays when calculating insurance risks, costs, and premiums.
Insurance continued to progress and include other types of policies over the course of the coming years. Standards were introduced regarding the construction of housing facilities thanks to the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Later on, this gave rise to the first insurance companies for home insurance.
Ultimately, with ready-made calculations for probabilities and mortality charts, Benjamin Franklin also aided the establishment of the first life insurance company in the US, the Presbyterians’ Ministers Fund. This type of insurance wasn’t as readily accepted at first, with particular opposition coming from religious organisations who protested against it placing a price on human life. Nevertheless, once it became clear that the policies worked to an advantage for widows and orphans, opposition resided and life insurance was readily adopted by US residents everywhere.
Soon afterwards, the Industrial Revolution instigated the rise of many new businesses, prompting the need for business insurance among the remaining types. Manufacturers and retailers needed a way to protect their main source of income; nonetheless, the workers called for a workers’ compensation type of insurance, and disability policies were also introduced.
The history of health insurance in the United States dates from a later period, but it’s still rated as one of the most popular types of policies issued across the nation. In 1864, the Travelers Insurance Company issued their own first policy for accidents, while 1889 recorded the first-ever auto insurance type, as vehicles became a more permanent part of everyday life.
With all kinds of insurance policies readily available on the market, it became a rather chaotic environment in no time. Starting from the oldest insurance company to the ones established most recently, all were quite eager to sign new subscriptions and paid little notice to the actual formation of insurance contracts. Without any formal rule of operations, the industry saw multiple companies, individuals, as well as insurers go down due to incompetent or improper, ie fraudulent operations.
The first state to standardise the writing of insurance contracts was Massachusetts, back in 1873. About a decade earlier, it was the same state’s Commissioner of Insurance (1858–1866), Elizur Wright, which introduced further regulations to their insurance companies. The history of health insurance timeline, or any insurance type for that matter, take this as one of the most significant periods for the industry. Wright personally took upon the task of devising what he called an accumulation formula, including actuarial tables and other equations to better determine the price of insurance, how sustainable it would be for the company and policyholders as well.
Another important point in time for the history of health insurance came about in 1901, with the Appleton Rule. It was enacted by the state of New York, determining monocline insurance as the regular kind, with three distinct lines of work-life and health, fire and casualty, without any intermixing allowed between them.
The Social Security Act of 1935 prompted the advent of regulation since they took over the provision of benefits for the unemployed or retired. Afraid of further federal interference, insurers were all but forced to comply with stricter provisions. There was even an attempt by the Supreme Court to regulate the industry at the federal level but this was overthrown by the McCarran-Ferguson Act of 1945, retaining authority at the state level.
Hence, even the oldest insurance companies in the US that managed to persist throughout the years were officially defined as financial services. By the end of the 1940s, multiple-line insurance companies were also introduced and called for an even more definite limitation between insurance companies and other financial service providers, such as banks and brokerages.
Nowadays, insurance in the US is seen as an investment as well as a necessity. While health insurance dates later than some other types of policies, it is well within the focus of US authorities and individual residents alike. The history of health insurance has come a long way. Now, it is a standard requirement for anyone looking to build a quality lifestyle.
Aside from insurance policies oriented towards protecting people or their property from potential risks and harms, the US insurance industry, nowadays, includes some more unconventional policies. Custom-tailored preferences are the standard, as well as providing top-notch services and creating circumstances for substantial fraud.
After all, insurance is only the second most costly crime in the US, the first being tax evasion. With massive repercussions for everyone involved, it is crucial to be aware of all threats, even the ones coming from establishments intended to minimize risk in the first place.
This detailed overview of the history of insurance is aimed to provide you with some insight into the primal idea behind such concepts. After all, it turned out to be one of the most lucrative lines of work on a global scale, and just as beneficial for everyone involved.
All things considered, insurance is a crucial and indispensable part of life; therefore, a basic knowledge of its roots is more than welcome to better understand the mechanics behind the insurance giants.