The evolution of Insurance

There are days in our daily life when we step out of home, confident about the weather seeing the clear sky and conclude, there wouldn’t be rain. We step out without an umbrella. Then, there is a heavy cloudburst.

There is definitely a plethora of such incidents we face everyday. It could be a sudden greeting from a childhood friend on Facebook, the Traffic jams, ATM queue, Burglary, Bookmyshow seat availability, Discounts and more such events…. How much has this “Randomness” puzzled the humanity ?

In the 16th century, the French nobleman Chevalier was irked with the uncertainties in gambling, his favorite leisure activity. He wanted to decrypt the mystery of knowing the probability of getting consecutive ‘6’, 3 times in the dice. Blaise Pascal and Pierre de revealed that a mathematical probability could be determined. This attempt in forecasting the future was opposed by the Church. The irony is the Mortality table that was built by the Church to predict the average lifetime of a person. The primary agenda was to put order to the apparent randomness of life and death based on which life events could be planned. This mortality table was proved fraudulent.

Over the years, the standardization of the Insurance industry, as per the mathematical calculation of probability was adopted.

One such big incident that changed the social and economic situation of a country was the Black Death epidemic caused by plague, believed to have killed more than 50% of Rome’s population in the 14th century. This was also the time when the cruise those departed on trade never returned back. There was a scarcity of traders and money in the country. This eventually caused shortage of laborers which increased cost in acquiring them. It was this time when the economic revolution gained momentum in the 15th century after the discovery of the sea routes to the East by Vasco da Gama. (The loss of people in Cyclones and unreturned ships, plague and economic slowdown were the big unforeseen events that cost much and poignantly impacted the social life of the people.) After many years, the trade terms had to be instituted overriding the informal trade and commerce methodologies.

The Insurance was an advent as a mode of defense against the uncertain events. And the risks were shared between the wealthy businessmen which formed a jurisdiction of syndicates with new protocols. In 1688, the Lloyds of London, an Insurance group was established, in which multiple financial backers pooled risks to mitigate the losses that might have otherwise been taxing to an individual trader / sailor. With time, the number of syndicates increased in this promising and bankable venture. In the meantime, Lloyds coffeeshop started publishing newspaper with information from various parts of the world which helped them determine the risks based on the climate, social, commercial and demographic changes across nations. Thus, Insurance was coined as a protection of family, goods and assets. This eventually scaled to new categories when this responsibility was welcomed and voluntarily adopted by individuals who planned to Cover their family members against natural disasters or Death. The progress in this domain is a long ongoing historic subject.

In 2016, The Indian government jurisdiction IRDA (Insurance Regulatory and Development Authority) has proposed new legalities breaking a certain barriers for the standardization of the Insurance policies. There is scarcity of awareness in the Health Insurance domain. The Insurance policies launched recently by the Insurers like ICICI, TATA AIG, HDFC, NewIndia, Oriental, Universal Sompo, etc, have new Benefits those weren’t present earlier. The Government had made the automobile insurance a legal mandate with the increase in number of road accidents. Today, in the 21st century we have Life, Term, House, Car, Bike, Health, Travel and Pet insurances.

Fact is, Insurance does have many underwritings. However these underwritings is not in Partian (Central Asian language used no more). It is a detailed document with a certain subject terminologies. A common man, busy with his mundane tasks, resists to consciously invest time in understanding the details. The Insurance agents who sell the policies might hardly explain the conditions / limitations applicable behind the clauses. The IFs & BUTs behind each clause is what might shock you when you raise a Claim without the understanding of the Policy documents.

The ease of understanding the eCommerce terminologies to a layman is vital. The purchase decision of an Insurance should be a customer’s own based on his/her understanding while choosing a particular Insurance over the others. This brings the sense of responsibility on self. More than SELLING, the conversation of the Agents / Website with a potential should be about EDUCATING.

In the end, “the real risk is doing nothing.“

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