6 Facts About the History of Insurance
Posted by: Agent Hub
As an insurance agent, you’re passionate about helping your clients protect themselves and their valuables against the unexpected. But where exactly did the insurance industry come from? Read on to learn six interesting facts on the origins of the insurance industry.
Benjamin Franklin was one of the early proponents of mutual insurance
In addition to his roles as statesman, scientist and author, Benjamin Franklin added insurer in 1752 when he founded America’s oldest, continuously active insurance company. Along with several prominent businessmen, Franklin established the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.
The Philadelphia Contributionship set new standards for building houses
The establishment of the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire ultimately set new standards for building houses. Because the organization was a proactive insurance carrier that refused to provide coverage to houses and other structures that were not constructed in compliance with strict building standards, higher quality homes came into production. The criteria used to evaluate buildings were reworked into both building codes and zoning laws.
The insurance industry used to be fraught with fraud and scandal
When the sale of insurance products exploded, the young industry was plagued with fraud and scandal. From companies not having the capital to pay claims to Ponzi schemes, to insurers demanding outrageously high premiums, the insurance industry was an interesting world until the early 1900s. Around this time, numerous state laws were passed to attempt to curb the problems, but things were still very unsettled.
The Social Security Act shaped the insurance industry that we know today
When the Social Security Act went into effect in 1935, it provided unemployment compensation and old-age benefits — but it also shaped the insurance industry. Following its implementation, the insurance industry lost some of its territory and was sent a clear signal that encouraged the industry to regulate itself if it wanted to avoid government involvement.
In 1944, the Supreme Court ruled that insurance should come under federal regulation
Following the implementation of the Social Security Act, World War II brought a wage freeze, making companies desperate to attract what workers were still left in the country. As a result, large companies that could handle big policies received group life and health insurance, which only made the poor poorer and the richer rich. Following this, the Supreme Court ruled that insurance should come under federal regulation. However, a year later, in 1945, Congress passed the McCarran-Ferguson Act, which returned control to the state-level.
The internet changed the insurance industry as we know it
The insurance industry has come a long way from its creation. While history shaped the insurance agency for hundreds of year, the internet has drastically changed the industry in less than 20 years. Now, people can simply go online to learn everything they need to know regarding different types of insurance, find economical rates and the like.