The first American life insurance company was organized in 1809 as a stock company. The first mutual policy was issued by the Mutual Life Insurance Company of New York in 1843. The New England Mutual also started business in 1843, and between 1845 and 1847 five other companies were organized.
The development of life insurance was one of the many social changes that appeared during President Andrew Jackson's administrations. At that time male suffrage was spreading, a new wage-earning class was rising, and individuals were awakening to new opportunities and responsibilities.
Sine then life insurance has created some of the largest financial institutions in the world. Before the outbreak of World War II the total income of insurance companies in the United States exceeded the income of the federal government. This income consists not only of premiums but also of profits from investments. Life insurance companies own a large proportion of government bonds, utility and industrial bonds, railroad securities, and urban and farm mortgages. Since many mortgages have to be taken over, insurance companies own and manage various types of property.
Because the assets of life insurance companies in the United States total billions of dollars and nearly all their funds are invested, these companies are powerful agencies of the credit needed to finance the nation's enterprise.. To millions of policyholders, insurance represents a big part of their savings. It is also their chief source of credit when they need to borrow.
How Insurance Began
The principle of insurance can be traced back to the days of ancient Babylonia. Insurance as a business, however, is no older than the 14th century, when Italian merchants began insuring ships. The earliest known life insurance policy was issued in England in 1583, and the first English insurance law was enacted in 1601.
About a century later of the most famous insurance firms came into existence. This was Lloyd's of London. It started about 1609 in the coffeehouse kept by Edward Lloyd. Businessmen interested in shipping and foreign trade came here, and some of them were willing to act as insurers, or underwriters. Ship owners and others looking for insurance underwriters soon went to Lloyd's to do their business.
The great development of insurance came with the spread of industrial organization between 1850 and 1900. Now it is possible to obtain protection against almost any kind of financial loss, including damage by cyclones, hailstorms, and earthquakes and losses from bad debtsor from embezzlement by employees. Insurance companies may take over payments on personal loans, mortgages, and installment purchases if a debtor dies and has credit life insurance or if he becomes disabled by injury or illness and has consumer credit insurance. It is even possible to insure against loss of revenue caused by rain or snow on the day of a celebration, game, or fair.