THE HISTORY OF INSURANCE

保险发展史严佳刘梦迎付佳歆杨瑞颀韩蓉杨添

•The long history of prudent reserving and risk awareness had taught insurers to act cautiously!

BEFORE THE BIRTH OF INSURANCE

• Risk mitigation based on solidarity was widespread among guilds, trade associations, and village communities.

• SOME LIMITS

From conjecture to calculation

Pascal’s triangle

The development of probability

theory

Life expectancy

THE BIRTH OF MODERN INSURANCE

The age of reason• Enlightenment of the 17th and 18th centuries

provided the grounds for accepting actuarial science as a rational means to conduct better business.

• The search for laws, the statistical recording of natural events made the insurance develop.

• Insurance also helped money become the means of communication within the economy and contributed to more and more problems being expressed in terms of costs and time.

What triggered the birth?

The great fire of London in

1666

The first known joint stock

insurance（ 1681）

The importance of

sugar

The phoenix（ 1

782）

The industrial revolution

Insurance solutions

GLOBAL EXPANSION

◇It was from Britain that property and life insurance started colonising the world.

◇Because of the series of wars in Europe, growing trade, emigration, the British system was gradually adopted in most white settler colonies in the Americas, Australia and New Zealand, and in South Africa.

◇India was to become important as a springboard for the spread of insurance into the Far East.

Singapore in 1805

• It contributed much to the spread of insurance into East Asia.

• It was also to become important in the development of the automobile industry.

China Dutch insurance brokers in Indonesia

Latin America imported by European immigrants

Africa South Africa took the lead

◇Many countries had adopted social insurance schemes based on the German model invented by the Chancellor Otto von Bismarck to appease unrest among the growing proletarian classes.

REINSURANCE

Background • The size and the number of risks to be insured began

outstripping the capacities of the insurance industry.• Large catastrophes such as the fire of Hamburg in

Germany and Glarus in Switzerland

Advantage

CHALLENGE:SAN FRANCISCO

Front page of the San Francisco Examiner four days after the earthquake.

Insurance companies prepare for work

MONEY MATTERS

•After WWI: change in world an monetary politics

•The Great Depression

WORLD WAR II TO THE END OF 20TH CENTURY

WWII• DURING THE WAR:The capacity of German insurance was doubted.The boom in Asian market came to an abrupt end.• AFTER THE WAR:• In 1944, the 44 allied nations drafted the post war

international financial and monetary order in Bretton woods.

• The Bretton Woods agreement had not accounted for the role insurance would play in the economy and generally neglected the service industries and intangible goods.

• Tendency to nationalize reinsurance and insurance operations.

Maxed results:A large part of the world was closed for business.Most insurers survive.

Booming economy and growing problems

• The sudden recovery of auto insurance.• Compulsory liability insurance.• Policy of Government• Agreed minimum tariff• Support of Government• Risk• Limits of insurability.• Liability• Solution—cooperation• A new class of reinsurance managers, recruited from

universities, began engineering the risks together with their clients, and gradually reinsurers developed a new identity as risk exports and insurers of near-last resort.

70s

• In 1971, Richard Nixon took the US currency off the gold standard and initiated the demise of the Bretton Words system.

• Policy: neo-liberal politics• Influence: markets and companies not prepared to change were slowly overwhelmed by foreign investment and eventually taken over.

• Solution:• A comprehensive financial services model.

• The pace of globalization quickened and rising Asian and Eastern European economics joined the competition. Insurance was in greater supply than ever to meet growing demand in existing and new markets.

21ST CENTURY

Terrorism

Financial crises

Natural disasters

Pandemics

Longevity

Changes in the regulatory environment

•the end of a soft market

USD:23.8 BILLION

Naturaldisasters

• Despite the magnitude of the losses brought about by Katrina,the hurricane failed to bankrupt a single insurance company thanks largely to reinsurers who over the previous decades had specialised in providing cover for natural catastrophe risks to a much greater degree than other organisations.

• A boom to the growing catastrophe bond market

2005:

Katrina hurricane

USD 135 BILLION

The financial crises of 2008

• Two camps: financial guarantee insurers and those that had participated in the banking-like activities such as CDS and derivatives(衍生品 ).

• Insurers, however, were better prepared.• Implications: alert policymakers and regulators around the world to the need for consistent regulatory standards and increased cooperation between supervisors; the need for more robust risk management and governance.

POSITIVE OUTLOOK

• The art of risk management has remained the same over the last 150 years; what has changed is the complexity of those risks, their global distribution and their interdependency

• The many lessons that have been learnt over the long history of insurance and reinsurance have prepared the industry to cope with more challengers in the future.

上海的保险路