EVOLUTION OF INSURANCE 

A mechanism of sharing loss of one by many is as old as the human civilization. The Hindus refer to the Reegbed- their most sacred book, which describes the concept of 'Yogakshema’ which refers to the provision of security against risk. The Westerners record a form of insurance in early Rome where Romans gathered together in burial societies. They all contributed to a fund and the members of the pool had their burial cost met by the society. But the concept of insurance, as we understand it today, is not that old. In the following section we describe the evolution of three important form of insurance- marine insurance, life insurance and fire insurance. 

Marine Insurance 

Historians have uncovered evidence suggesting ,that some sharing of losses did exist among seafarers as early as the 9th century BC (Holyoake and Weipers). However, its development in England is well recorded only after 17th century. In the 17th century, insurance of ships and cargoes was often underwritten by merchants who were willing to carry part of the risk of a voyage in return for part of the premium. At that time those interested for insuring their ships and cargoes and those interested to bear risk for premium used to meet at coffee houses in London and enter into an agreement for insurance. These coffee houses were the business centers for marine insurance. Among the coffee houses one owned by Edward Lloyd and known as Lloyd’s Coffee House was famous in marine. But at that time there were no formal companies to carry on marine insurance business. The agreement used to take place between individuals or groups. It was only in 1720, two companies - London Assurance and the Royal Exchange were established under Royal Charter to transact marine insurance. With the growth of marine insurance business new companies came into existence. Growing business volume and number of insurance companies gave rise to the need for separate statue. Accordingly, Marine Insurance Act was enacted in 1906. 

In Nepal, there is neither separate marine insurance company nor separate statue to regulate marine insurance. Marine insurance is operated by non- life insurance companies who have taken permission to do so from the Insurance Board. Similarly, marine insurance business is regulated under Insurance Act. 

Life Insurance 

The first real evidence of life insurance dates back to 1583. William Gibbons was the first person to be insured in England. He was insured for a sum of £382. The contract was for 12 months and the money was to be paid if Gibbons died within the year. Similar type of policy (i.e. short-term) continued for the next century. The members of a form of mutual association contributed to a common pool. Payments on deaths used to be made out of the common pool. There was no separate act to regulate life business at that time. Mutual association had to be enacted through Royal Charter. Separate act for life insurance- Life Assurance Act was enacted only in 1774. 

Another important landmark on the evolution of life insurance is the development of mortality table. In simple terms, with the help of mortality table, we can determine the likelihood of dying a person of a given age. It facilitates the determination of Ilife premium. Astronomer Edmund Halley (after whom Halley’s Comet is named) and mathematician James Dodson contributed in the construction of mortality table. The work of Dodson introduced the element of science into the business. It helped insurance companies to determine premium for a person of a certain age and facilitated to issue whole life policy as well. 

Another important event in the evolution of life insurance is the introduction to the concept of industrial life assurance. Industrial Revolution produced ’industrial’ class who needed protection against industrial hazard. Insurance companies responded with industrial life insurance which suited the needs and pockets of the ’industrial’ class. 

In Nepal, it is the Indian insurance companies who initiated life insurance companies. Initially, they did it through their agents, but later on they operated through their branches. This system continued till 1972 when Rastriya Beema Sansthan, the first life insurance company in Nepal, started life insurance business in Nepal. Rastriya Beema Sansthan enjoyed monopoly power till National Life and General Insurance was established in 1986. But after the enactment of Insurance Act 1992 number of companies were registered to carry on life business. By mid-July 2009, nine insurance companies operate life insurance business in Nepal. 

Fire Insurance 

It is believed that fire insurance originated in Germany in the beginning of 16th century. But it got momentum in England after the great fire of 1666. Fire Insurance Office was established in 1681 in England. Then after, it spread all over the colonial countries of the world. 

In Nepal, again it is the Indian companies who started fire insurance business. Nepalese companies entered into fire business only after the establishment of Nepal Insurance and Transport Company in 1947 and Rastriya Beema Sansthan in 1968. By mid-Jiily 2009, seventeen insurance companies operate fire insurance husiness in Nepal.