THE DEVELOPMENT OF INSURANCE

On looking back over the development of the different forms of insurance

dealt with in this chapter, a number of common features are apparent. By
the way of conclusion, we could list the following as being the main
common features:

1. Each class of insurance developed in response to a demand for

protection. This is easily seen in the case of fire, life, liability and the
other classes. The demand for protection was not always motivated
by the eventual purchasers: for example, employers' liability and
motor insurance were made compulsory by statute, thus increasingly
demand. The moves of Parliament in passing the appropriate
legislation could, however, are looked upon as the expression of the
people's desire to see protection purchased.
2. The development of the various forms of insurance was accompanied
by a measure of government supervision. We should note the interest
with which successive governments have viewed the development of
insurance.
3. In the main, insurance companies started off as the specialist
companies offering protection in one or two types of insurance only. A
feature of insurance development has been the way in which these

specialist companies have expanded the forms of cover they write.

Today there are very few specialist companies other than life and
pensions companies and the majority offer many different forms of
insurance.
4. Today most of insurance companies have gathered considerable
experience in many forms of insurance. They have also collated
statistics and have access to data collected by government and other
bodies, which assist in arriving at reasonable premiums to charge.
On looking back, however, a feature of the development of insurance
was the absence of any reliable statistical information on future
losses.
5. A further feature, perhaps following on from the previous point, has
been the way in which insurance companies joined together over the
years to pool resources .This had many advantages, some of which
were discussed in this chapter. The association of insurance
companies, all offering protection against the same kind of risk, could
classify the risks, pool statistics and come up with common wordings
and rates.
6. One feature which is quite striking is the success with which most
insurance companies transacted their business. Bearing in mind the
risky nature of their enterprise, the absence of reliable statistics and,

in many cases, the absence of adequate fire-fighting or security

services, the industry prospered. Today the vast funds, as we saw,
represent a major source of investment for the country.
7. A possible explanation for the relative security of insurers in these
uncertain times could be the growth of reinsurance. A feature of the
development of insurance was the way in which insurance
companies themselves sought financial protection. This insurance
bought by the insurance companies is terms reinsurance and is now
an essential part of the insurance market place.

8. One final feature of the development of insurance is one of more

recent origin, and refers to the way in which insurance companies
began to combine different classes of insurance. We have seen how
specialist companies began writing other forms of insurance and so
became composite insurers. Similarly, those composite insurance
companies began combining different forms of cover in one policy. A
good example of this is the way companies put fire, theft, liability and
other forms of cover together in one policy for the householder and
termed it the household combined, or household comprehensive
policy. Combined policies or comprehensive policy are now common
feature in many companies.