Through this blog I am excited to share my passion for insurance with the world. However, before I launch into the difference between split and single limits, conversion coverage, basic versus special perils and the like, let’s share some history on Property and Casualty Insurance and some reasons why this industry is so important to all of us.
Wikipedia defines insurance as, “the equitable transfer of the risk of a loss from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss.” For example: in exchange for premium dollars calculated on your risk (home) your insurance company assumes the possibility of loss (house fire). Insurance is a method of spreading the chance of a loss over a large number of similar uncertainties, thereby better predicting individual losses with improved accuracy. This method depends on the pooling of a large number of similar risks, often referred to as “the law or large numbers.”
So what does that really say?? We are all in this together. Prior to insurance, if your neighbor’s home burned to the ground, the community would (hopefully) rally together and rebuild the home. While you are no longer up on a ladder hammering nails into Mrs. Smith’s new house, you are still helping to rebuild it with your insurance premium. By paying your annual premium, you not only get protection in the event of a loss, but on any given day, your dollars could be helping someone else.
While policies such as homeowners are relatively new in the history of insurance, the concept of transferring a risk is very old. The first basic insurance policy was created in Babylonian times about 2000 B.C. At that time, traders got tired of losing their goods to bandits and thieves during transport, so to guarantee the safe arrival of their wares, they took out an insurance policy in the form of a loan. As trade and methods of transport grew, so did the need for insurance. The modern type of insurance policies, premium in exchange for a guarantee, that we are now familiar with were born out of the boom in the British shipping industry in the 17th Century. The primary peril they faced? Pirates!! Of course thievery by pirates was not the only peril the shippers faced, bad weather, fire and shipwrecks were also insurable risks. Over the centuries, needs changed and policies evolved. From the Great Fire in London emerged Fire Insurance – as catastrophes took place, policies arose.
Today we have coverage for just about any possibility. The more we have, the more we stand to lose, and so the insurance industry is consistently learning and evolving in order to provide the consumer with the best possible product.
Insurance is a terrific industry to be in. We get to be there for you and alleviate our financial burden at a time of loss. My job as an Independent Agent is both important and rewarding. And remember, I am not only an agent, I am also a consumer who is happy to share my premium dollars with you, should you ever need them.