The history of Insurance goes back to ancient Greece as people at the time employed insurance-like practices in certain domains, predominantly within maritime contracts.
Although Insurance, as we understand it today, did not exist in the form of modern insurance companies or policies, ancient Greek society had in place some basic forms of risk-sharing and financial protection.
Many ancient Greek states were maritime powers depending on sea trade. But, it was a dangerous trade and carried inherent risks, such as shipwrecks, piracy, and unpredictable weather conditions.
So, a financial arrangement called “bottomry,” was used. It wasn’t exactly insurance. According to Solomon Huebner in his scholarly article in The Annuals of the American Academy of Political and Social Science:
“…The commercial nations of the ancient world secured the benefits of insurance through the so-called ‘loans on bottomry,’…loans made on the security of the ship and cargo at high rates of interest, and with the understanding that the principal with interest was to be repaid only in the event of the safe arrival of the vessel…”
As Historian Erik Brown writes in Lessons from History, bottomry was like some odd mixture of a loan and insurance. Lenders gave you money. But you only repaid it with the interest required if your ship made it to the destination and back. So if the ship sank, the lender absorbed the loss.
Insurance and maritime law in ancient Greece
Another example of an Insurance-like mechanism in ancient Greece was the “loans on respondentia” which allowed loans to be secured using the cargo itself. These contracts demonstrated attempts to distribute risks among multiple parties, thus embodying the fundamental principle of insurance.
Ancient Rhodes, a supreme naval power, developed rules of law to deal with shipping disputes, including a code of maritime law known as “Lex Rhodia”, believed to have been written around 900 – 800 BC. Whilst no copy of “Lex Rhodia” has ever been found, it is mentioned in later Roman writings.
As the history site Radar notes the law is explicitly mentioned in a book of Roman law text, “Opinions of Julius Paulus” (235 AD):
“It is provided by the Lex Rhodia that if merchandise is thrown overboard for the purpose of lightening a ship, the loss is made good by the assessment of all which is made for the benefit of all.
“If after a ship has been lightened by throwing the merchandise overboard, it should be lost, and the merchandise of others should be recovered by divers, it has been settled that he who threw his property overboard for the purpose of saving the ship will be entitled to an account of the same.
“Where either the ship – or a mast – is lost in a storm, the passengers are not liable to contribution, unless the vessel was saved through the passengers themselves cutting down the mast to insure their own preservation.
“Where, for the purpose of lightening a ship, merchandise is thrown into a boat and lost, it is established that the loss shall be made good by the assessment of the property which remained safe in the ship. If, however, the ship should be lost, no account should be taken of the boat which was saved, or of the merchandise it may have contained.
“Contribution by assessment should be made where property has been thrown into the sea, and the ship has been saved.”
Temples act as Insurance in ancient Greece
Religion played a significant role in Ancient Greek society, permeating various aspects of life. Temples, in particular, acted as centers of communal activities, including the management of financial risks.
Temples often housed the wealth of the community and were considered safe havens in times of crisis or disaster.
Individuals and maritime traders would deposit money, offerings, or loans at these temples, providing a form of protection against potential losses. While not precisely insurance in its modern sense, these practices exhibited a collective effort to handle financial uncertainties within the bounds of religious institutions.
In ancient Greece, especially in Athens, there were various forms of mutual aid societies or clubs called “eranoi” or “thiasoi.” These groups were formed by individuals with common interests or occupations, and they contributed to a common fund from which members could draw in times of need.
While not insurance in the modern sense, they provided a form of collective support during times of financial hardship.