Insurance policies were first taken out in the early 1700s. In 1706, William Talbot and Sir Thomas Allen founded the Amicable Society for a Perpetual Assurance Office in London. The first life insurance plan stipulated that each member would pay an annual fixed payment per share with the age of the member being between 12 and 55. After the end of the year, a portion of the “amicable contribution” was shared between the heirs of the deceased members and was proportional to the number of shares owned by the heirs. Amicable Society started with 2000 members.
The first life insurance company in the world was founded in 1706 by the Amicable Society for a Perpetual Assurance Office.
It wasn’t until the 1750s that the mathematical and statistical tools needed to develop modern life insurance had been developed. Edmund Halley wrote the first life table in 1693.
After being denied admission to the Amicable Life Assurance Society due to his advanced age, mathematician and actuary James Dodson founded a new company that issued premiums that could be used to offset the risks from long-term life insurance policies. Prior to his death in 1757, he did not succeed in obtaining a charter from the government.
In 1762, Edward Rowe Mores established the Society for Equitable Assurances on Lives and Survivorship as a result of his study. A pioneer of age-based premiums based on mortality rates, the firm laid the foundation for scientific insurance practices and the modern life assurance system upon which all others have been built.
The position of chief official is also referred to by More as an actuary-the first known reference to the role in a business context. William Morgan was the first modern actuary, appointed in 1775 and serving until 1830.
In 1776, the Society carried out its first actuarial valuation of liabilities, followed by the distribution of the first reversionary bonus (1781) and interim bonus (1809) to its members. To balance competing interests, it also performed regular valuations. A fair return on policyholders’ investments was the goal of the Directors of the Society. Members were treated fairly, and the Society sought to provide a fair return on their investment.
Age-related premiums applied, and anyone could be admitted regardless of their health or other circumstances.
As early as the 1760s, life insurance began to be sold in the U.S. Philadelphia and New York Presbyterian synods founded the Philadelphia Corporation for the Relief of Widows and Children of Presbyterian Ministers in 1759, while Episcopal priests established a comparable relief fund in 1769. In the period between 1787 and 1837, more than a dozen life insurance companies were established, but few of them endured.
1848 marked the beginning of accident insurance with the formation of the Railway Passengers Assurance Company.
It was in the late 19th century that “accident insurance” was introduced. In this respect, it was like disability insurance today. Founded in 1848 in England to insure against the rising number of fatalities on the nascent railways, the Railway Passengers Assurance Company offered accident insurance as early as 1848. The company’s name was changed to Universal Casualty Compensation Company to:
…grant assurances on the lives of persons traveling by railway and to grant, in cases of an accident not having a fatal termination, compensation to the assured for injuries received under certain conditions.
A deal was reached between the company and the railroad companies under which basic accident insurance would be bundled with travel tickets for customers. Due to the greater risk of injury in the roofless classes, the company charged higher premiums for second- and third-class travel