February is insurance job month and since insurance has been so good for my house, I feel obliged to participate. To paraphrase an old comedian, "If it hadn't been for insurance, I would be insurance today."
Our friends at the Insurance Career Movement (www.insurancecareerstrifecta.org) have beaten this drum now since 2015. They ask the participants to write about insurance and how we affect the world. This week's focus is on philanthropy and economic impact. Because of that, I think it's time for a history lesson because we need to be reminded of how important this industry is to the rest of the economy. I can get a simple idea of things, but the insurance industry affects economies all over the world, but our primary impact is in the local economy.
A brief insurance history
The term insurance goes back thousands of years and while the forms of insurance change over time and the written agreements also change, the idea has been the same.
The ancient Babylonian king Hammurabi recorded one of the earliest forms of insurance in his code of laws in 1
Let us quickly move forward to a time that many of us are already aware of. If you have done any kind of study of insurance history, you know Edward Lloyd. You probably don't need me to tell the whole story, so I skip to the core of it. By establishing his coffee house where he did it and was willing to move it to the heart of the shipping industry, he created the conditions in which the basics of marine insurance could be created and flourished.
We could tell the history of history all day long, including how our old friend Ben Franklin established a pattern of fire insurance and fire protection that still exists today. We could talk about Buffalo, the NY doctor who bought the first registered true car policy in 1989. We could even talk about how a group of Texas teachers in 1929 could get in touch with Baylor University Hospital to give them advance
What has all these moments in history in common?
- A farmer cannot work with his fields.
- A sender seeks help from "name" to sign the risk of his shipment
- A group of people gather to agree to protect each other from the fire risk by forming a fire company and an insurance company.
- The teachers seek help to pay for the medical care they need.
In all these cases, we talk about people coming together with side-persons and creating economic stability and opportunity in their communities. How does the insurance world support economic health?
Insurance reduces the risk of trading
If you ever applied for a loan, you know that the banks want to borrow money when they think they will be repaid. If you have ever been denied a loan or been asked to find a co-signer, you can bet that the bank looked at your information and decided that you would not repay that loan.
One of the risks a bank has is that something will happen to the person who lent money to. Bankers actually save something from happening to your car or home. They are afraid that if your car is damaged or your house is burning, and you do not have insurance on it, you will stop paying for it. That type is meaningful in one way. I mean, who wants to make payments on a damaged car sitting in a yard?
To let them sleep at night, they need insurance on the big purchases before they write the loan. That way, they can rest and know that if something happens, you continue to pay.
Insurance reduces the risks in society
Imagine that you and your family just went out to watch a movie. On the way home, three fire trucks go over you. You think a little about it until you realize they are on your way. They are not just on your street, but they are in front of your house and a cascade of water is spraying from the top of a truck. When they are finished, the smoke still smokes in spots; rivulets of water flowing with half-burned images wander down your driveway; you keep your loved ones, trying (meaningless) not to cry; and wonder what to do tomorrow.
Now imagine that 2 months ago you wrote the check that paid off the mortgage and you called your insurance agent. She asked you not to cancel your homeowner's policy and tell them it covers more than just the house, but you were looking to save $ 3,000 next year. Furthermore, when was the last time a house burned down here?
The family in this story needs clothes and food. They need a place to live. They need someone to help them find out which way is up, so they can find normal again and find it soon.
Homeowners policy that they used to have included coverage so that they could make room to stay while they judge what will come next. It included coverage for some new clothes so that they do not wash the same pair of jeans and underwear every day. It included coverage to get a company to clean up their ruins and start the process of rebuilding it.
Without insurance, they have no money to get the garbage removed, so the city has a new danger that they have to deal with. The neighborhood has a problem because the burned house down the block drives the property values down. Some neighbors want to move, but they can't sell their homes with that over there.
We have not even mentioned that with insurance, communities can have public parks and fun things for the children to do. Insurance protects the fire brigade from any claims that may come to them.
Oh. Did I mention that insurance companies hire people who buy things and drive our finances forward? The insurance industry supports my local finances for me to get some food.
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