Some forms of insurance had developed in
London by the early decades of the 17th century. For example, the will of the English colonist
Robert Hayman mentions two "policies of insurance" taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of £100 each, one relates to the safe arrival of Hayman's ship in Guyana and the other is in regard to "one hundred pounds assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed and sealed on 17 November 1628 but not proved until 1633.
[16] Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s,
Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today,
Lloyd's of London remains the leading market (note that it is an insurance market rather than a company) for marine and other specialist types of insurance, but it operates rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the
Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667."
[17] A number of attempted fire insurance schemes came to nothing, but in 1681
Nicholas Barbon, and eleven associates, established England's first fire insurance company, the 'Insurance Office for Houses', at the back of the Royal Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office.
[18] The first insurance company in the
United States underwrote fire insurance and was formed in Charles Town (modern-day
Charleston),
South Carolina, in 1732.
Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against
fire in the form of
perpetual insurance. In 1752, he founded the
Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.
[19] Franklin's company was the first to make contributions toward fire preve
ntion. Not only did his company warn against certain
fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses.
In the United States,
regulation of the insurance industry primary resides with individual
state insurance departments. The current state insurance regulatory framework has its roots in the 19th century, when
New Hampshire appointed the first insurance commissioner in 1851.
[19] Congress adopted the McCarran-Ferguson Act in 1945, which declared that states should regulate the business of insurance and to affirm that the continued regulation of the insurance industry by the states is in the public's best interest.
[19] The Financial Modernization Act of 1999, commonly referred to as "
Gramm-Leach-Bliley", established a comprehensive framework to authorize affiliations between banks, securities firms, and insurers, and once again acknowledged that states should regulate insurance.
[19] Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through the
National Association of Insurance Commissioners. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the
Optional federal charter (OFC)) for insurance similar to the banking industry.
In 2010, the federal
Dodd-Frank Wall Street Reform and Consumer Protection Act established the Federal Insurance Office ("FIO").
[20] FIO is part of the U.S.
Department of the Treasury and it monitors all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that may contribute to a systemic crisis in the insurance industry or in the U.S. financial system.
[20] FIO coordinates and develops federal policy on prudential aspects of international insurance matters, including representing the U.S. in the
International Association of Insurance Supervisors.
[20] FIO also assists the U.S.
Secretary of Treasury with negotiating (with the U.S. Trade Representative) certain international agreements.
[20] Moreover, FIO monitors access to affordable insurance by traditionally underserved communities and consumers, minorities, and low- and moderate-income persons.
[20] The Office also assists the U.S. Secretary of the Treasury with administering the Terrorism Risk Insurance Program.
[20] However, FIO is not a regulator or supervisor.
[20] The regulation of insurance continues to reside with the states.
[20]