History of the Insurance Industry
Although insurance has existed for thousands of years, it is only over the last 100 or so years that the insurance industry has really taken shape into the form that we recognize today. In order to investigate the growth of the insurance industry, this history of the insurance industry research paper will focus on insurance companies as they existed in the early 1900's and as they exist 100 years later.
Around 1890, the biggest issue that plagued most insurance companies was that they were relatively new. Certainly, insurers such as Lloyd’s of London had been around for nearly 200 years and insurance had been established in the United States for almost 150 years by that time. However, the insurance industry was just getting established outside of very small insurers. As a result, many of these organizations had difficulty raising the capital needed to be able to effectively cover their clients if the need arose. For example, the Fireman’s Fund had been in existence for almost 30 years by 1890, but they had only managed to raise $1,000,000 in capital by that time (Fireman’s Fund). Although this appears to be a significant amount of capital, it should be recognized that Fireman’s Fund was one of the largest insurers in the United States at the time.
In 1890, most insurers tended to focus only on a single market, which limited their potential to some degree. For instance, the Fireman’s Fund only provided fire insurance (Fireman’s Fund) while Lloyd’s of London strictly provided maritime insurance at the time. Around this time, insurers expanded into other markets to allow further growth; however, in 1890 insurers tended to focus only on a single market for the most part.