Dealing with the contingency of loss or unexpected circumstance can be cumbersome without a backup. Over the years, insurance has served many as a protection against financial loss which can arise on the happening of an unexpected event.
In the 3rd and 2nd millennia BC, Chinese and Babylonian traders practiced the act of distributing risk by distributing their wares across many vessels when traveling on treacherous rivers to limit the loss experienced by an individual which may occur due to a vessel's capsizing. Other tribes adopted different methods to help absorb their losses. In the times of Achaemenian monarchs, heads of different ethnic groups presented gifts to the monarch. The gifts were registered by the court so that whenever the person who presented the registered gift was in trouble, the monarch and the court would help him.
As time went by, countries and their citizens needed something to help spread risk among large numbers of people and to move risk to entities that can handle it. This was how insurance emerged. Risk with regard to insurance matters refers to the possibility of loss, not the loss itself, but the possibility of a loss.
In 1752, Benjamin Franklin, founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Houses at this time were made almost entirely out of wood. Worse yet, the settlements that grew into the cities were built close together. Later, the Philadelphia Contributionship set new standards for building houses because it refused to insure houses that were considered fire hazards. Seven years later, the first Life Insurance Company evolved with Franklin being an instrumental part in the set up. Life insurance, originally conceived to protect a man's family when his death left them without income, later developed into a variety of policy plans.
At this time, the various religious authorities were outraged at the practice of putting a value on human life, but criticism cooled when it was seen that insurance worked to protect widows and orphans. The industrial revolution then brought the necessity of both business insurance and disability insurance to the forefront.
Different types of insurance came to being in reaction to new risks that evolved. In 1864, the Travelers Insurance Company sold its first accident policy. 1889 saw the first auto insurance policy. As time progressed, new types of insurance were blooming along with the risks of an increasingly modern life.
In Nigeria today, reimbursement for an individual lost is absorbed from funds put together by many individuals exposed to the same having contributed certain specified amounts, called premiums. Many friendly or benefit societies have been founded to insure the life and health of their members, and many fraternal orders were created to provide low-cost, members-only insurance.
These insurance enables those who suffer a loss or accident to be compensated for the effects of their misfortune. The payments come from a fund of money contributed by all the holders of individual insurance policies. In other words, individual risks are pooled and shared, with each policyholder making a contribution to the premium, the common fund.
Historically, insurance services have not been popular with the Nigerian public as just 1% of the country’s population has any form of insurance policy. This can be attributed to the fact that many Nigerians have not been exposed to the benefits of the insurance cover.
Many are exposed to the everyday risks of life which we all face such as fire damage, accidents, theft…etc. Faced with these risks, we all could certainly be in need of some financial protection which we can find in the purchase of insurance. After all, that is why insurance exists because people need security. Everyone wants to own houses, run cars, sell goods, build factories, fly planes, sail ships, but at the same time, no one wants to be exposed financially to all the risks involved in these endeavours. This is where insurance comes to play. .. Insurance does not take away the risk. The house may still burn down, the car may be in an accident but at least a large element of the cost involved will be met by the insurance company which gives peace of mind.