Background of Insurance

Insurance as security is need of all human beings. No animal, no plant nor mountains and oceans want any security, like man does. Man is afraid of uncertainty, fears and death. Although a reality, one day each one will die; early or later, timely or untimely is the question, which has no answer. He is afraid of risk & losses in future. He is ever in search of security & certainty.

In early history man lived in-groups and communities to be secure. At the earlier stage, whenever an earning member would die due to disease or death, the other members of the social group (or family or clan) would contribute to bail the survivors in the family out of financial difficulties. This contribution was in the shape of food- clothing and shelter.

Even today we donate money, food, clothing and other materials of life to rehabilitate the family whose breadwinner has left for his heavenly abode, unfortunately, suddenly, sadly. (Also people, friends, relatives even today contribute towards marriage, education, healthcare expenses or mishap). Later, as commercial considerations grew stronger and stronger; nucleus family growth became a common practice these contributions and sharing started becoming individualistic and took the shape of ‘premium’.

The ‘assurances’ which were earlier by will and practice became a commodity (though intangible). Thus the concept of Insurance grew. Any person who would not contribute, or would contribute less according to his paying capacity was denied reciprocal help or promise of help, or was given help in proportion to his contribution which he had been contributing as a faithful obedient member of the society.

In earlier days, in India, on an unexpected death of breadwinner in any family, the villagers or neighbourhood would collect funds to help the survive in the family and such practice continues even now. Today also, when after death – “Bhog” or “Kirya”s takes place, relatives give money to the survivors though this may not be adequate collection to meet expenses of remaining part of life when there is no breadwinner. Insurance is on similar pattern.

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