Swiss Re A History of Insurance 150 YEARS
A History of Insurance
Table of contents Risk tradition and risk trading From conjecture to calculation The birth of modern insurance Global expansion Reinsurance World War II A poor start for the 21 st Natural catastrophes Financial catastrophes, regulation, and a po
Table of Contents Foreword 2 Introduction 4 Risk tradition and risk trading 6 From conjecture to calculation 8 The birth of modern insurance 10 Global expansion 16 Reinsurance 24 San Francisco 26 Swiss Re History 30 Money matters 38 World War II 44 Booming economy and growing problems 46 More money matters 50 A poor start for the 21st century 54 Natural catastrophes 56 Financial catastrophes, regulation, and a positive outlook 60
Foreword Dear readers This year Swiss Re celebrates its 150th anniversar Since the time of our foundation in 1863 the world has changed a lot. And insurance has been an instrumental part of this change We all know that without risk protection, no skyscraper could be built, no products marketed, no goods shipped Insurers and reinsurers have become key risk takers and ultimately the shock absorbers in today' s evermore interconnected and volatile world But the insurance industry does still more. Premiums are invested on a long term basis in different financial assets. Through their investments insurers and reinsurers provide capital to the real economy and support the production and provision of goods and services Swiss Re is proud to be part of this process. Initial types of insurance and reinsurance were used long before Swiss Re came into existence. some already in ancient times. But with the expansion of global trade, the industrial revolution, and the advent of social security our industry rapidly gathered momentum, and Swiss Re evolved with it. Our own past and present would not have been possible without our clients and their hard work to develop the global insurance markets 2 Swiss Re A History of Insurance
2 Swiss Re A History of Insurance Foreword Dear readers This year Swiss Re celebrates its 150th anniversary. Since the time of our foundation in 1863 the world has changed a lot. And insurance has been an instrumental part of this change. We all know that without risk protection, no skyscraper could be built, no products marketed, no goods shipped. Insurers and reinsurers have become key risk takers and ultimately the shock absorbers in today’s evermore interconnected and volatile world. But the insurance industry does still more. Premiums are invested on a long term basis in different financial assets. Through their investments, insurers and reinsurers provide capital to the real economy and support the production and provision of goods and services. Swiss Re is proud to be part of this process. Initial types of insurance and reinsurance were used long before Swiss Re came into existence, some already in ancient times. But with the expansion of global trade, the industrial revolution, and the advent of social security our industry rapidly gathered momentum, and Swiss Re evolved with it. Our own past and present would not have been possible without our clients and their hard work to develop the global insurance markets
Contributing to the prosperity of these markets has always been paramount for Swiss Re be it by helping diversify risk, supporting our clients in growing their balance sheet, or by providing knowledge and expertise and supporting our clients and partners with dedication and reliability We would like to express our gratitude to our clients and share some of the highlights of the insurance and reinsurance industry with you. To do this we are publishing a series of insurance history brochures to shed more light on this rather neglected aspect of world history We trust you will enjoy this publication We look forward to continuing to work with you for the benefit of our clients, our markets and ultimately also our economies and societies -protecting this generation, but also the generations to come Most sincerely Michel lies Group CEO Swiss Re A History of Insurance 3
Swiss Re A History of Insurance 3 Michel Liès Group CEO Contributing to the prosperity of these markets has always been paramount for Swiss Re – be it by helping diversify risk, supporting our clients in growing their balance sheet, or by providing knowledge and expertise and supporting our clients and partners with dedication and reliability. We would like to express our gratitude to our clients and share some of the highlights of the insurance and reinsurance industry with you. To do this we are publishing a series of insurance history brochures to shed more light on this rather neglected aspect of world history. We trust you will enjoy this publication. We look forward to continuing to work with you for the benefit of our clients, our markets and ultimately also our economies and societies – protecting this generation, but also the generations to come. Most sincerely
Introduction A total of USD 4 613 billion was spent globally on insurance in 2012 Modern life can hardly be imagined without this form of risk protection And yet, comparatively little is known about the history of the industry, although it has played a major part in shaping today s society and culture. Industrialisation, welfare, innov economic development, or modernisation per se would not been the same without private insurance Since the 18th century, building insurance on solidarity, business acumen, and the logic of calculation has proved an almost unbeatable business idea. It was to conquer the world over the next centuries Trade and emigration became the two most important enablers for creating a global insurance safety network As every history. that of insurance has been exposed to challenges Many were inherent to the industry. Some large catastrophes proved too big to deal with for some companies From the San Francisco Earthquake in 1906 to Hurricane Betsy in 1965 or the attack on the World Trade Center in 2001 the industry had to cope with unexpected enormous losses. But challenges also came from the economy and its recurring crises which at times caused bigger losses than the worst insured catastrophes. Also monetary issues caused difficulties with floating exchange rates and fluctuating interest rates But overall the insurance industry has proved remarkably resilient to all these challenges. E\ the recent crisis insurance was less affected than other industries. a long history of prudent reserving and risk awareness had taught insurers to act cautiously HET INSTORTEN VAN HUIZEN N IET OMKOMEN DEN AI
4 Swiss Re A History of Insurance Introduction A total of USD 4613 billion was spent globally on insurance in 2012. Modern life can hardly be imagined without this form of risk protection. And yet, comparatively little is known about the history of the industry, although it has played a major part in shaping today’s society and culture. Industrialisation, welfare, innovation, economic development, or modernisation per se would not have been the same without private insurance. Since the 18th century, building insurance on solidarity, business acumen, and the logic of calculation has proved an almost unbeatable business idea. It was to conquer the world over the next centuries. Trade and emigration became the two most important enablers for creating a global insurance safety network. As every history, that of insurance has been exposed to challenges. Many were inherent to the industry. Some large catastrophes proved too big to deal with for some companies. From the San Francisco Earthquake in 1906 to Hurricane Betsy in 1965 or the attack on the World Trade Center in 2001 the industry had to cope with unexpected enormous losses. But challenges also came from the economy and its recurring crises which at times caused bigger losses than the worst insured catastrophes. Also monetary issues caused difficulties with floating exchange rates and fluctuating interest rates. But overall the insurance industry has proved remarkably resilient to all these challenges. Even in the recent crisis insurance was less affected than other industries. A long history of prudent reserving and risk awareness had taught insurers to act cautiously