The History (and Future) of Insurance Isn't What You Thought
Long before Starbucks venti fraps and made-for-Instagram beverages, there was another coffee shop that was even more popular. Within the heart of London, there sat a coffee shop on Tower Street that would become the start of one of the world’s largest financial industries. Edward Lloyd opened a coffee shop in 1686 to cater to maritime folk and sea merchants. It was here that he served coffee, tea and information.
As business boomed this hub of shipping information became something more. Lloyd’s London coffee house became the birthplace of modern insurance as merchants, sailors, and patrons were able to bid on cargo ships voyages. It was through this unsavory beginnings that the fundamental concept of insurance began to take place.
Needless to say, insurance has not come to be regarded as the most beloved industry in America, or even the world. This is understandable; insurance is an important part of life that forces us to deal with the idea of losing our most precious things: cars, homes, jewelry, and even loved ones. However, much like the rest of the world, the insurance industry has evolved significantly over the past half century. When Lloyd’s of London first opened their doors, The United States was still over a century away from becoming an independent nation.
So how did we get from maritime wagers to green geckos? As with all things it came about as the needs grew and time went on.
Lloyd’s began as maritime insurance; it provided sailors an opportunity to pass something on to their families or protect their cargo. Then, in the 1800’s the Presbyterian Synod of Philadelphia created a life insurance plan to benefit the ministers and their dependents. But even these early insurers were simply doing as the Romans did. Records show the Romans created the first ever type of life insurance: a “burial club” that troops paid into, and upon the untimely death of a fallen soldier, the funeral expenses would be covered along with a small stipend to the family.
In the early 1900s, once insurance was no longer seen as “gambling,” the industry boomed; burial, life, health, and insurance on everything in between took off. In 1930, after WWI, there was a life insurance policy for every man woman and child in the US – 120 million people.
Now, insurance is everywhere. We protect our health from exorbitant bills, our cars from fender benders, our homes from fire damage, and our lives for our families. Some of the largest companies in the US are insurance providers, as well as some of the most popular commercials. However, there is one area that is not insured – the internet.
While the common adage goes that “once it is online, it never comes down” may technically be true, in reality, there is no formal insurance for anything on the web. While companies and providers may offer an ecommerce connection, they do not actually have any payout. There will be no claim to file with the almighty tech titans of Amazon or Google upon the loss of photos. There are no grounds to stand on against Apple or Facebook for the loss of records and memories.
As much as insurance has changed from the bustling streets of London, no one could have foreseen the growth high speed internet would bring. Insurance in the digital age has yet to come about, and in the days of cyberattacks, crypto currencies (Bitcoin), and crappy computers. It is time that the insurance industry evolves to meet the digital age.
It is difficult to place a value on digital goods. It is not the same as getting a ring appraised and asking a broker to indemnify your Picasso-esque portrait. However, at some point, there needs to be an e-demnification of digital material and digital footprints so that the memories and histories can live on.
And who knows. Maybe insurance will come back around - and in a few years, we'll be gathering in internet cafes to insure space missions.