Insurance is the most efficient social protection instrument of the last 4 thousand years

A rule very similar to modern insurance already existed in ancient Mesopotamia, and it is fascinating to think that Pedro Álvares Cabral’s fleet was insured when he discovered Brazil

It’s not every day that a columnist reaches the milestone of 1,200 articles on a specific topic. This is the 1,200th article on insurance published in Estadãoevery Monday since May 28, 2001, when the article appeared why take out insurance.

The safe theme is seen as insipid, dry and does not say much or attract the reader. I confess that I see the subject with different eyes. Insurance fascinates me as a science and as a tool for everyday life, mainly because of the moral principles that for more than 4,000 years have provided the basis for the most efficient instrument of social protection.

In ancient Mesopotamia, there was already a protection rule very similar to modern insurance, by which the losses borne by caravans were divided in proportion to the participation of each member.

The basic principles of modern insurance were applied, for example, in the Middle Ages, by the Italian republics, in the elaboration of protection for their commercial transactions. In 1350, the king of Portugal implemented two actions that, less than a hundred years later, would result in the navigations that opened up to Europe a huge part of the planet, until then hidden in the fog of legends. First, he had forests planted to build ships, and second, he created a fund to replace vessels of all kinds lost to misfortunes at sea, funded by 10% of fishing revenue.

It is fascinating to think that Pedro Álvares Cabral’s fleet was insured when he discovered Brazil. And that, before and after it, the Portuguese navigations had the support of the fund created in 1350 to replace the lost vessels along the voyages.

Likewise, the importance of maritime insurance, created on the edge of the London pier, in a cafe called Lloyds, for the consolidation of the British Empire, is fundamental. And it is even more interesting to see that this cafe is still operating and is the largest insurance and reinsurance center in the world, responsible for protecting assets and operating capabilities in the most varied regions of the Earth.

The principles underlying insurance are solidarity, mutualism, compassion, sharing losses and protecting the group by sharing losses among its members. Turned into a business, these principles have resulted in modern insurance companies, responsible for paying hundreds of billions of dollars in claims every year.

In Brazil alone, they paid nearly half a trillion reais to society in 2022, in return for hiring their products. More than 95% of indemnities are paid quickly and without any fuss, giving the insured the necessary resources to replace their losses . On the other hand, they are the largest holders of government bonds, enabling the government to finance its debt.

There is no way to find an institute and a scenario with these characteristics and their relevance arid. If possible, I intend to write at least another 1,200 articles showing the peculiarities of this little-known activity.

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