The History of Life Insurance
The history of life insurance date right back to Ancient Rome in the UK. As early as 100BC Roman soldiers joined forces to provide for their wives and children. Each member paid a monthly fee so that they could afford funeral expenses and give a small portion to the deceased’s family.
However, it wasn’t until more recent times that the first official company came into being in the UK.
Life insurance in the UK
The first official company that offered life insurance was formed in London in 1706. A group of gentlemen came together and called themselves the Amicable Society for a Perpetual Assurance Office.
The Amicable Society
Each member of the society had between one and three shares and made an annual payment each year. Each member was aged between 12 and 45. At the end of the year, a portion of the money was given to the family or any deceased members based on the share their heir owned.
The society was established under the charter of Queen Anne and states that “the design would be of singular use and relief to many families by providing for great numbers of widows and orphans who might probably be otherwise wholly and destitute of a maintenance by the sudden death of those on whom they depend.”
The company was the first mutual life insurance society in the world. That was until James Dodson came along.
The society for equitable assurances
Mathematician and actuary, James Dodson, tried to join the Amicable Society in 1750 but was turned away due to his age (he was over 45!). It was then that he had the idea to use mortality tables developed in 1693. These tables guessed the age that you would pass away based on your current age. In this history of life insurance, these tables were relatively new so hadn’t previously been used against premiums.
He thought he could use this idea to reform life insurance and assess the price based on the risk. In his bid to form a new company, James Dodson was turned down.
It wasn’t until after his death, his successor, Edward Rowe Mores was able to take over. He was able to establish the society for equitable assurances on lives and survivorship in 1762.
In doing so, he became the pioneer of age-based premiums based on mortality rate.
The company actually remained open until 8th December 2000 and was more modernly known as Equitable Life. By 1799 they had around 5,000 policies on their books and had over 1.5 million policies at their peak.
When the company closed to new business in 2000, Equitable Life slowly compensated customers and eventually transferred their existing policies to Canada Life.
The Life Assurance Act
In 1774, UK parliament passed the Life Assurance Act in a bid to stop life insurance loopholes and gambling. Before the Act was introduced, a person could take out a policy on any individual, even if they hadn’t known them,
The Act introduced a new rule, which meant that a person had to show a ‘legitimate interest’ with the individual insured. This could mean a family member, friend or business partner.
The modern history of life insurance
Since the 1700s, there are have been stories of many firms paying out for people who lost their lives on the Titanic, in natural disasters, 9/11 and many other huge life events. Life insurance has protected so many families over the years from financial hardship when they lose a loved one.
Now, the UK has one of the largest insurance industries in the world with plenty of choices available for consumers. In the UK over 5.5 million households owned a life insurance policy in 2015. Yet, there are still so many out there that haven’t invested in life insurance.
For more information and advice regarding your life insurance, get in touch today or get a quote.