When seafarers learned overland merchants insured their wares, they wanted coverage, too.
Media outlets often portray the insurance industry as being mired in bureaucracy, engaging in questionable practices and showing disregard for the people who most need coverage. It wasn't always this way. Centuries ago, insurance not only appealed to pragmatic consumers but in the earliest times, claims were paid simply by making oral request to the party to whom a premium was paid. Such is not the case these days, as many claimants will attest.
The Roots of Insurance Claims
The first insurance policy ever issued was based on the Code of Hammurabi in 2100 B.C. This innovative idea, indemnifying assets against loss, appealed to merchants whose travels by caravan were regularly threatened by weather, accidents and robbers. If a merchant encountered problems transecting countries with his camel-born merchandise, he asked the person for reimbursement upon returning home. That constituted the entire claim process.
Mercantile Insurance Claims Expand
Seafaring merchants wanted coverage when they got wind of overland insurance deals, thus Phoenicians and Greeks contracted with specialists willing to make good on losses in return for a pre-paid premium. The Romans took the idea a step further when burial clubs added a prepaid funeral expense service. Claims were made by and paid to family members. The idea of organizations sponsoring insurance coverage extended to medieval guilds, but the first actual written contract didn't appear until 1347.
The Role of the Underwriter in the Claims Process
Selling an insurance policy was one thing. Determining the validity of a claim was another. A new professional title arose from the insurance industry: the underwriter. Astronomer Edmond Halley authored a mortality table in 1693 using statistics to predict how long people of varying ages would live as well as the chances of assets being lost or destroyed. The world's most iconic insurance agency -- Lloyd's of London -- had already been established in1688, but it took a few years before Halley's claims-based underwriting methods became accepted practice.
Insurance Claim Changes in the 18th Century
Modernity pushed commerce to new heights. As a consequence, risks expanded. The burgeoning insurance industry, armed with improved versions of Halley's tables, pioneered new ways to calculate risk, collect premiums and oversee claim payouts. Stock companies diversified, adding insurance divisions and claim processes grew more complex over time. Paying premiums became as commonplace for a family as rent and food, but when large, commercial claims beset carriers in the mid-1800s, high losses, such as those incurred by the Great Chicago fire of 1871, pushed insurers to rethink underwriting criteria and claims processes. The era of "reinsurance," the self-protecting brainchild of the insurance industry, had dawned.
Contemporary Insurance Claims
Today's medical insurance claims process is particularly daunting. During the 1800s, doctors handled health care needs for a rural population and remained the sole financial claimant for fees, but today's health industry is so layered that health care workers and administrators must be reimbursed in addition to doctor's fees. Today's insurance claim process can seem arbitrary at best. Suicide clauses, pre-existing conditions, lifestyle choices and convoluted policy language conspire to make today's claim processing experience difficult, but until laws mandate change, insurers remain for-profit companies with surpluses to maintain.
Tags: Insurance Claims, insurance industry, claim process, health care, insurance policy
