The History of Insurance

01The Shop That Sold News Instead of Coffee

16 Lombard Street, London. Toward the back of the shop stood a pulpit, looking much like one you would see in a church. An employee would climb up and read aloud the latest shipping news. They called out which ship had reached which port, which vessel was overdue, and which sea route had sightings of privateers. Candle auctions for ships were also held right here.

The shopkeeper's name was Edward Lloyd. In the late 1680s, he opened a coffeehouse on Tower Street near the Thames docks, and in December 1691, he moved to Lombard Street in the heart of the City. What he sold was not coffee, but news. Shipowners, captains, merchants, and brokers gathered there, and the fastest information piled up, which in turn drew even more people seeking that news. In 1734, Thomas Jemson founded Lloyd's List, turning that buzz into a regular publication. Insurance was an information business right from the start.

Here is how transactions actually took place. A broker would walk in holding a single sheet of paper. Written on it was which ship was carrying what cargo and where it was headed. This piece of paper was called a slip. Those willing to share the risk wrote their names and the amounts they would cover one after another at the bottom of the page. An underwriter literally means 'a person who writes underneath.' The very name of the profession captures the exact scene in which it was born. The broker was the seller, and the underwriter decided what to insure, at what price, and for how much.

There is one important distinction to make first. Lloyd's is not an insurance company, but a marketplace where insurance is bought and sold. There are capital-providing members, syndicates that pool this capital to take on risks, managing agents that run the syndicates, and brokers that bring in clients, while the Corporation of Lloyd's oversees this marketplace. Lloyd's itself states that it is not an insurer. That is why it is more accurate to say 'syndicates in the Lloyd's market paid the claim' rather than 'Lloyd's paid the claim.' On top of that, Edward Lloyd himself never sold insurance in his entire life.

Lloyd died in February 1713. What he created was not a company, but a venue, and that venue only grew larger after his death. Today, a bell hangs inside the Lloyd's building. It was salvaged from HMS Lutine, a warship that sank in a storm in 1799. Whenever news arrived that a ship was lost, they rang that bell. It is one of the few tangible relics left behind by an industry built entirely on promises.

Worth remembering The stage for this story is a marketplace, not a company. Understanding this makes it clear why everything that followed unfolded the way it did.

02Risk Was Being Shared Even Before the Word “Insurance” Existed

In 1816, a marble inscription carved in two columns was unearthed in Lanuvium, Italy. Dating back to the first half of the 2nd century AD, it recorded the bylaws of an association dedicated to Diana and Antinous. To join, a person had to pay 100 sestertii and an amphora of good wine, and 1.25 sestertii each month thereafter. When a member passed away, those funds paid for their funeral. Most of the members were freedmen and enslaved people.

This wasn’t insurance; it was mutual aid. They did not charge more to those at greater risk. Whether a member was 20 or 60 years old, the dues were the same, and it wasn’t an enterprise run for profit. This lineage passed through medieval guilds to modern friendly societies, and eventually evolved into social insurance. Its roots were entirely different from the tradition born in coffeehouses.

Another root was far more calculating. The Code of Hammurabi included provisions for lending money against the collateral of a ship and its cargo. If the voyage failed, the borrower did not have to repay the debt; if it succeeded, the loan was repaid with very high interest. This arrangement was later called bottomry. Maritime lenders in Athens used the same approach, charging higher interest for winter voyages when storms were frequent. The concept that the price of risk fluctuates with the seasons already existed back then. However, this was a conditional loan, not a system that collected upfront premiums to pay out insurance claims upon a loss.

The third root was a rule. In the 3rd century AD, a Roman legal code cited an ancient principle under the name of the “Rhodian Law.” It held that if cargo was thrown overboard to lighten a ship, what was sacrificed for the benefit of all had to be made whole by the contribution of all. This is where modern marine insurance gets the principle of general average. Later in history, this rule would resurface under truly horrific circumstances.

Loans and insurance began to branch apart in the merchant cities of Italy. Prominent examples include a 1343 document from Pisa and a notarized contract from Genoa dated October 1347. The Genoese document insured the voyage of the ship Santa Clara to Majorca. Even so, these deeds were drawn up in the guise of loans to avoid the Church’s ban on usury, and sources still disagree on what truly qualifies as the “first.”

Then in 1601, the English Parliament passed its very first statute on insurance. Francis Bacon delivered a speech in the House of Commons supporting the bill. The preamble of the act included a striking phrase: thanks to policies of assurance, even if a ship sinks, no one faces ruin, and the loss falls lightly upon many rather than heavily upon a few. It is a line that perfectly captures how people understood insurance 400 years ago. The act went so far as to create a specialized court of insurance to resolve disputes, but it was welcomed neither by merchants nor by the established courts, and it barely functioned. A brilliant phrase alone did not make an enduring institution.

Worth remembering Insurance does not have a single root. The lineage that prices risk and the lineage that does not split here, and it will take a very long time before they meet again.

03How a Pastor’s Ledger to Dispel Superstition Became a Price Table for Human Lives

Breslau, known today as Wrocław, Poland. A Protestant pastor there, Caspar Neumann, spent several years doing the exact same thing: recording, one by one, every birth and death in his city. His goal was not statistics. A superstition had been circulating that people were prone to die at certain ages, and he wanted to prove it wrong.

That bundle of papers began a journey. Passing through Gottfried Wilhelm Leibniz to the Royal Society of London, it eventually reached the hands of Edmond Halley—the very Halley famous for the comet. For exactly one month, from February 8 to March 8, 1693, he wrestled with the data and published a paper. The latter part of the title is what matters: 'an Attempt to ascertain the Price of Annuities upon Lives.' By charting how many people survived at each age into a table, one could calculate the fair price of a contract promising someone a yearly sum for life. Why Breslau, of all places? Unlike London or Paris, it was a city without heavy migration, meaning its numbers were not skewed by people coming and going.

Yet at the starting line of this mathematics stood a gambler. In 1654, a gambler named Chevalier de Méré posed a question to Blaise Pascal: if a game is interrupted midway, how should the stakes be divided? Pascal and Pierre de Fermat exchanged letters to find the answer, and probability theory was born. In 1662, a London draper named John Graunt gathered decades of parish bills of mortality posted on church walls, tallied them up, and published a book. It was not a scholar, but a merchant who pioneered statistics—the habit of counting numbers had come from bookkeeping.

In 1713, Jacob Bernoulli’s Ars Conjectandi was published, 8 years after his death. What he called his 'Golden Theorem'—the law of large numbers—was rigorously proven here for the first time. The point was that while no one knows when an individual will die, we can know quite accurately how many out of 10,000 will die. This theorem is why insurance is not prophecy, but aggregation. In February of that same year, Edward Lloyd of Lombard Street passed away. In the very year the man who gauged risk by gut instinct died, a theorem measuring risk through mathematics was given to the world.

Yet having a table did not mean it was put to use right away. Halley’s table lay dormant for nearly 70 years. The Amicable Society, which opened in 1706, is considered the world's first mutual life insurance society. Members paid the same amount each year, and the families of members who died that year shared the pooled money. A twelve-year-old and a forty-five-year-old paid the exact same fee. It was closer to a lottery dividing up membership dues than insurance based on probability.

The mathematician James Dodson was reportedly turned down for membership because of his age. He reasoned that older people should simply pay higher premiums. Building upon Halley’s table, he designed a system that varied premiums by age while keeping payments level throughout the contract. It was structured so that extra money paid in one's youth was saved up to cover the higher risks of old age. Dodson died in 1757 without ever seeing his company, but 5 years later, in 1762, successors who embraced his method founded the Equitable. In 1775, William Morgan, nephew of the Reverend Richard Price, became the society’s actuary and calculated for the first time how much money would have to be paid out in the future. In that room, a profession was born—not in accounting to record what had passed, but to calculate what was yet to come.

Worth remembering The tool that pushed gambling aside was born from a question at a gambling table. This irony becomes the backbone of the next chapter.

04When You Could Bet on Another Person's Life

In May 1771, the London Evening Post carried a striking report: more than £60,000 had been wagered on whether the Chevalier d'Éon, a French diplomat and spy, was a man or a woman. Some accounts put the figure at £120,000 or even £200,000, making the precise sum impossible to pin down. What is certain is that staggering amounts of money were changing hands over another person's body. And those wager policies were drawn up in stockbrokers' offices and at Lloyd's alike. Gambling and insurance were being written on the exact same paper, in the very same room.

This was hardly an isolated incident. In those days, anyone could take out an insurance policy on the life of a total stranger. A defendant awaiting trial, an admiral setting off on a perilous voyage, a bishop rumored to be falling ill, a convict awaiting execution—anyone could have a price tag pinned to their name.

Cleaning up this room required three decisive moves. The first concerned physical property. In 1745, the British Parliament passed the Marine Insurance Act. Its preamble noted that policies issued "interest or no interest" had introduced a pernicious kind of gambling under the pretext of underwriting maritime risk. Starting August 1, 1746, any insurance taken out by someone with no actual interest in a ship or its cargo was rendered completely null and void. Prior to that, people could wager on another person's ship going down, and during wartime, merchants in enemy countries would even place bets on the sinking of British vessels.

The second move came not from legislation, but from the people themselves. By the late 1760s, Lloyd's Coffee House was gaining a reputation as an unruly place that would accept any risk whatsoever. In March 1769, a head waiter named Thomas Fielding leased rooms at 5 Pope's Head Alley for £80 a year, established "New Lloyd's Coffee House," and sent cards out to the old establishment's patrons. Serious underwriters simply walked out, leaving the gamblers behind. Five years before the Life Assurance Act, market participants moved rooms on their own. Two years later, 79 merchants, underwriters, and brokers each deposited £100 into the Bank of England to form the very first Lloyd's committee. In 1774, they relocated to the Royal Exchange in Cornhill, where they set out the Loss Book to record news of ships that failed to return.

The third move was the law. On May 20, 1774, the Life Assurance Act received royal assent. Commonly referred to as the "Gambling Act," it laid down four rules: policies without an insurable interest were void; the beneficiary's name had to appear on the policy; payouts could not exceed the actual monetary value of that interest; and ships and merchandise were excluded from this statute. The core principle was the very first: you can only buy insurance if you would actually suffer a loss when the event occurs—the concept of insurable interest. If your own house burns down, you suffer a genuine loss, so you can insure it; you cannot place a bet on your neighbor's house catching fire.

This single line divides gambling from insurance. Gambling means putting money on an unrelated event and walking away with a brand-new windfall if you win. Insurance simply restores what was lost, providing nothing beyond that. That is precisely why the third provision placed a hard ceiling on payouts. As a side note, in life insurance this interest is determined at the moment the contract is signed, whereas in property and casualty insurance the interest must also exist at the time the loss occurs. It is the same underlying rule, applied at different stages.

The courts soon moved in the same direction. On January 31, 1778, Lord Chief Justice Mansfield struck down a wager contract placed on the sex of the Chevalier d'Éon. The plaintiff had paid 75 guineas to receive £300 if d'Éon was proved to be a woman. Although the jury ruled that the plaintiff should receive the £300, Mansfield held that wagering contracts on another person's sex harmed that person's interests and could not be enforced by the law. Back at the Royal Exchange, news of vessels that never returned continued to be inscribed in the Loss Book with quill and ink. To this day, entries are made the very same way.

Worth remembering This is the heart of the story: the line was not drawn overnight. For physical property, the law moved first; for human life, the market acted first.

0530 Pounds per Person

On November 29, 1781, on the deck of the slave ship Zong in the middle of the Atlantic, the crew began throwing people into the sea. This continued over several days. The ship had departed Accra on August 18 of that year, with more than 440 people packed onto a 110-ton vessel. Historical accounts note that this was more than four times its safe capacity. The stated reason was a lack of water. More than 130 people were thrown overboard. Because records differ on both the number of people on board and the number murdered, the exact figure remains unsettled to this day.

Afterwards, the shipowners in Liverpool submitted an insurance claim. It was for 30 pounds per person. It meant that a price tag had been placed on human life.

In March 1783, a trial was held at Guildhall in London. But this trial was not about murder. What the court disputed was whether the 'cargo' had been legitimately jettisoned. The jury ruled in favor of the shipowners, and when the insurers appealed, Lord Mansfield ordered a retrial, citing new evidence that it had rained during the voyage. He was not putting slavery on trial. He was judging whether the insurance claim was legitimate. Not a single crew member was prosecuted for murder.

The logic the shipowners used is what matters. It was general average, which we saw earlier. The oldest risk-sharing rule, tracing back to Roman law: what is sacrificed for the sake of all is shared by all. A humane idea about sharing risk was applied verbatim to the calculation of packing people into a cargo hold.

Olaudah Equiano, a freed slave, brought this case to the abolitionist Granville Sharp, who attempted to prosecute the crew for murder but failed. As a result, the incident remained in legal records solely as an insurance dispute. And that very fact became the most powerful weapon for the abolition movement later on. Insurance did not create slavery. Yet no document recorded what that era truly considered a human being to be more honestly than an insurance ledger.

Worth remembering A chapter showing just how far pricing can go, where the rule from the previous chapter returns with its darkest face.

06The Watermen Who Put Out Fires, and the Insurance That Insurers Bought

In the 1680s, whenever a fire broke out on the streets of London, men wearing blue, green, or crimson uniforms rushed over pulling pumps. On their left arms, they wore large metal badges stamped with their company’s crest. They were not municipal firefighters, but Thames watermen hired by insurance companies. The very arms that once rowed boats now hauled water.

This scene began across four days in September 1666. A fire starting at a bakery on Pudding Lane engulfed London. It destroyed 13,200 houses and 87 churches, reducing 436 acres to ashes. Damages were estimated at the time to exceed 10,000,000 pounds. Only then did it become painfully clear that no one was underwriting the risk of an entire city turning to ash all at once.

Nicholas Barbon, an economist and property developer, steadily counted and recorded the number of buildings lost to fire thereafter. Using those statistics as his foundation, he established the Fire Office behind the Royal Exchange in 1680 and began selling insurance the following year. The person who counted risk was the one who sold risk. While the Hamburg Fire Box had been established earlier in 1676, that was a public institution created by the city, not a private corporation. In London, the Hand in Hand followed in 1696, and the Sun Fire Office in 1710. These companies nailed metal marks onto the exterior walls of insured homes.

A famous legend often accompanies this practice: that brigades simply walked past houses that lacked a fire mark. The London Fire Brigade Museum firmly debunks this as a myth. If a fire spread, the entire neighborhood would burn, and every insurance company would lose.

The same idea crossed the ocean. In 1752, a group gathered in Philadelphia and agreed to remain contributors who would share equally in both losses and gains. Benjamin Franklin was one of the founding members. The first fire mark in America, created by this mutual society, depicted four clasped hands cast in lead—a physical object that captured mutual aid in a single image.

Then, on January 1, 1833, ten insurance company brigades in London merged into one: the London Fire Engine Establishment. Its first superintendent was James Braidwood. It was the first step in transforming private fire brigades, each wearing different-colored uniforms, into a single organization safeguarding the entire city. In essence, what insurance created, insurance handed over to the city.

Yet who would protect the insurance companies themselves? On the night of December 16, 1835, amid bitter cold near -20 degrees, a fire broke out in Lower Manhattan, New York. Water froze inside the fire hoses. By the next day, 17 blocks across the Financial District and 674 buildings had burned, with damages estimated at approximately 20,000,000 dollars. An even greater crisis followed. Most of the 26 fire insurance companies in New York could not handle the claims and collapsed. The ones that paid every claim in full were the well-capitalized companies from Hartford, Connecticut, and Hartford became the capital of American insurance ever after.

A premium is the money a policyholder pays, a payout is the money received when disaster strikes, and solvency is the ability to keep that promise—in other words, how deep a company’s capital reserves are. The New York companies collapsed not because their premiums were too cheap, but because their solvency was concentrated in a single city. The law of large numbers holds power only when risks are independent of one another. Faced with a catastrophe that strikes everyone all at once, it breaks down.

And so, insurance for insurers was born: reinsurance. After the Great Fire of Hamburg in 1842 brought down insurers en masse, the world’s first independent professional reinsurer, Cologne Re, was founded in April 1846. Following the massive fire in Glarus, Switzerland in 1861, Swiss Re was established in December 1863. In 1880, bankers and industrialists in Munich founded Munich Re. The strategy of Carl von Thieme, who took charge of management, was simple: take on small shares from as many companies as possible to scatter the risk far and wide.

In October 1871, Chicago burned for two days. Damages exceeded 200,000,000 dollars, and 129 insurance companies were operating in Chicago at the time. Yet that was not the number that truly mattered. Fewer than half of the homeowners were insured. On top of that, as insurers collapsed one after another, the money actually paid out was halved again from that remaining fraction. That same year in Britain, the Lloyd’s Act was passed, granting Lloyd’s formal legal incorporation for the first time. On one side, insurers vanished in the ashes; on the other, insurance donned the armor of institutional law.

Worth remembering The shift from private creation to public handover, and the revelation that insurers too can perish together: this is where the stage is set for the state to step in.

07'Pay in Full Regardless of Policy Terms'—A Line That Was Also a Calculation

On April 18, 1906, San Francisco shook, and the fire that followed consumed the city. A few days later, an underwriter in London cabled his San Francisco agent: Pay all our policyholders in full, regardless of the terms of the policies. His name was Cuthbert Heath.

Why was this single line so extraordinary? At the time, most fire insurance policies did not cover earthquakes. Because of that, many insurance companies dug in their heels, claiming they could not distinguish earthquake damage from fire damage, and offered to pay only 80%. In reality, fire losses exceeded $500 million, of which about 40%, or $235 million, was insured, while direct earthquake damage was tallied at $24 million. Syndicates in the Lloyd's market paid out over $50 million, and the United States subsequently became the market's largest customer. Munich Re absorbed 11 million marks, an amount equal to 7% of the firm's annual premium income.

It would be a mistake to read this merely as a heartwarming story of a virtuous insurer. Heath's decision was also a calculation on reputation as an asset. Others in the very same market did not act that way. Heath was a man who systematically turned risks no one dared to price into commercial products. Starting with burglary insurance in 1889, he introduced all-risks coverage, business interruption insurance, employer's liability, earthquake and hurricane insurance, and even excess-of-loss reinsurance. His guiding principle was a single sentence: Any risk can be underwritten if the price is right.

Six years later, the market's most famous single slip of paper was drawn up. On January 9, 1912, broker Willis Faber entered the underwriting room to place coverage for the Titanic and her sister ship, the Olympic. Hull coverage was £1 million per vessel. Down a single slip, various syndicates wrote down their names and shares, ranging from £10,000 to £75,000 each. The premium was 15 shillings per £100, amounting to £7,500 per ship. On April 15, the ship sank, and White Star received payment in full within 30 days. That payout amounted to 20% of the entire market's premium income that year. It does not mean the market bore 20% of the overall loss; it simply means a single claim was that immense.

Yet the same market once came perilously close to self-destruction. In 1988, the Piper Alpha oil rig explosion, followed by the Exxon Valdez oil spill and a series of hurricanes, struck in close succession. In a structure where reinsurance bought reinsurance and reinsurance bought that in turn, the very same losses spiraled through multiple layers, being claimed again and again. On top of that, liabilities for asbestos and environmental pollution underwritten decades earlier came crashing in all at once. From 1988 to 1992, losses reached about £8 billion. There were 34,000 individual capital-providing members known as 'Names,' and about 5,000 of them were saddled with losses exceeding £600,000 per person. Because their liability was unlimited, many lost their homes and life savings. In 1996, Lloyd's cordoned off these legacy liabilities into a separate company named Equitas, and only in 2006, when Berkshire Hathaway acquired that company, were the Names finally freed from their obligations.

The idea of spreading risk far and wide works in reverse the moment no one can count where it was scattered. That was when the true gravity of putting one's name at the bottom of a slip of paper became painfully clear.

Worth remembering Decisions that honored promises and people crushed beneath those promises coexisted within the very same market. This chapter keeps us from viewing insurance as either a heartwarming fable or a pure scam.

08Insurance Where You Don't Decide Whether to Enroll

A British worker had 4 pence deducted from their weekly pay envelope. In return, the employer contributed 3 pence, and the state added 2 pence. That made 9 pence accumulating each week, giving rise to the slogan '9 pence for 4 pence.' Crafted by Chancellor of the Exchequer Lloyd George with the help of Home Secretary Churchill, the National Insurance Act received royal assent on December 16, 1911.

Crucially, the structure of receiving more than you put in was built into the design from the start. That is something unthinkable in private insurance. Before Britain, there was Germany. Chancellor Bismarck pushed through the Health Insurance Act in 1883, the Accident Insurance Act in 1884, and the Old Age and Disability Insurance Act in 1889. Employers paid the entire accident insurance premium, while old-age insurance was split equally between workers and employers, with the state adding a subsidy. For the first time in the world, an insurance system was created where individuals did not decide whether to join or not. While it is widely accepted that this was a calculation to blunt the appeal of socialism rather than out of genuine affection for workers, scholarly debate remains.

Why was it mandatory? Because of adverse selection. People who know they face higher risks are more eager to buy insurance, while insurers cannot tell. This drives up premiums, causing healthier, lower-risk people to drop out first, which pushes premiums even higher. Taken to its logical end, the market collapses entirely. Adverse selection is a problem that arises before a contract is signed. It is not a matter of bad people, but of information existing on only one side. If everyone is brought in and no one can opt out, this vicious cycle never starts. That is why social insurance is not simply 'insurance run by the state,' but 'insurance that chose not to price by risk.' This is not about which approach is superior; the two solve fundamentally different problems.

Of course, the 1911 act did not cover the entire population. It targeted wage earners—about 70% of the workforce—leaving out family members and unpaid workers. By 1913, enrollment reached about 2.3 million people for unemployment insurance and about 15 million people for health insurance. In August 1935, the United States created old-age pensions and unemployment insurance through the Social Security Act, but left out healthcare, leaving a void that lasted until Medicare in July 1965. The signing ceremony took place at the Truman Library in Missouri, where Harry Truman, who had tried and failed to push through universal health insurance 20 years earlier, became the first enrollee on the spot. In Britain, Beveridge published a report in November 1942 naming the five giants of Want, Disease, Ignorance, Squalor, and Idleness; within 2 weeks of its release, 95% of the public reported knowing about the report. From it emerged the National Insurance Act of 1946 and the NHS in 1948.

What about Korea? In October 1922, Joseon Fire & Marine Insurance was founded. It was a non-life insurance company headquartered in Joseon during the Japanese colonial period, though its founding figures remain unconfirmed. Having changed its name twice, it survives to this day as the oldest existing insurance company in Korea. In September 1946, Daehan Life Insurance opened its doors. Around the time European states were taking charge of insurance, private firms were only just emerging here.

The public system arrived late. Although the Medical Insurance Act was enacted in December 1963, enrollment was voluntary, so virtually nothing happened. The Industrial Accident Compensation Insurance Act, enacted that same year and implemented in 1964, became the first genuinely functioning social insurance program. It began with large workplaces in mining and manufacturing. Health insurance was implemented in earnest in July 1977 for workplaces with 500 or more employees, expanded in 1979 to civil servants and private school staff, and finally reached the rest of the public in July 1989. It had taken 26 years since the law was first passed. Until then, insurers were fractured into hundreds of separate societies, but through mergers in 1998 and 2000, they were consolidated into one. If risk is split into small fragments, the societies where the sick and elderly concentrate collapse first. For national pensions, the law was passed in December 1973 but postponed due to the oil shock; it finally began in January 1988 for workplaces with 10 or more employees, expanded to urban areas in 1999, and reached workplaces with 1 or more employees in 2003. Employment insurance was implemented in 1995, followed by Long-Term Care Insurance for the Elderly in July 2008. This was the fifth social insurance program, designed to share the burden when growing old makes living alone difficult; as of 2024, there are 1,165,000 recognized beneficiaries.

This is why what recurs on Korea's timeline is not just calendar years, but the phrase 'workplaces with [X] or more employees.' Social insurance is not completed the year the law is passed, but as its coverage expands.

Worth remembering The lineage of the coffeehouse and the lineage of the burial club meet once again here. One decided to price risk, while the other decided not to.

09The More Accurately Risk Is Priced, the More People Are Pushed Out

After Hurricane Katrina passed, a couple in Mississippi received a check from their insurer. It was for $1,667. Their home had sustained more than $130,000 in damage. The policy contained a clause excluding water damage, and a dispute erupted over where the wind's share ended and the water's began when both forces struck at once. In 2007, the U.S. Court of Appeals for the Fifth Circuit ruled that only the $1,228.16 proven to have been caused by wind was covered. This isn't a story about a malicious company. It is simply how an anti-concurrent causation exclusion clause operates when two perils act at the same time.

There is an essential distinction to make here. Katrina's $125 billion was total damage, not insured loss. Swapping those two terms is the single most common error in disaster reporting. There have also been court decisions heading in the opposite direction. In January 2021, the UK Supreme Court largely sided with policyholders in a COVID-19 business interruption insurance test case brought by the Financial Conduct Authority against eight insurers, and thousands of claims were paid out as a result of that ruling.

In South Korea, a different sort of question is unfolding. As of the end of 2024, private indemnity health insurance counted 35.96 million policies, covering approximately 40 million insured individuals. Out of 20.2 trillion won spent that year on non-covered medical care, this insurance bore 8.2 trillion won. In the same year, the National Health Insurance coverage rate stood at 64.9%, total medical expenses reached 138.6 trillion won, and non-covered care within that total was tallied at 21.8 trillion won. The difference from the earlier 20.2 trillion won figure comes down to differing survey methodologies. Private insurance is stepping into the spaces public insurance leaves unfilled. Yet the argument that private insurance in turn drives up the volume of medical treatments also springs from these very numbers. The phrase frequently invoked here is moral hazard, but moral hazard, by contrast, is a problem that arises after a contract is signed. It is not meant to reproach character; it describes a structural reality where people behave differently once someone else shoulders their risk. Deductibles and coverage limits are mechanisms designed to keep that structure in check.

The question of what insurers are allowed to know when setting prices has grown even sharper. In May 2008, the United States signed the Genetic Information Nondiscrimination Act into law, barring health insurers from using genetic information to raise premiums or deny coverage. Yet this statute does not extend to life insurance, disability insurance, or long-term care insurance. Within the very same country and facing the very same genetic data, one market cannot look while another can. In July 2021, Colorado required insurers using external consumer data, algorithms, and predictive models to test and demonstrate that they do not unfairly discriminate on the basis of race, sex, or disability. It is a dilemma with no easy answers. Insurance only makes financial sense when different risks are priced differently, but as that precision sharpens, someone is inevitably pushed out of the market.

California is where that tension is laid bare. Between 2023 and 2024, seven of the top 12 insurers stopped writing new homeowners policies. With rate increases capped by regulation while reinsurance costs skyrocketed, they chose to stop selling altogether rather than raise prices. In January 2025, the Los Angeles wildfires became the costliest disaster in the world that year. According to Munich Re, total losses reached $53 billion, with insured losses at approximately $40 billion. Stepping in to fill that vacuum was the FAIR Plan, the insurer of last resort created in 1968. Its policy count grew from 124,000 in 2019 to 663,000 by March 2026. This institution was originally founded in response to redlining—the practice of drawing red lines across maps to shut out specific urban neighborhoods. Today, those lines are being drawn again across wildfire risk maps.

The picture looks much the same across the globe. According to Munich Re, total losses from natural disasters in 2024 stood at $320 billion, while insurance covered $140 billion. The remaining $180 billion was absorbed outright by individuals, businesses, and governments. This gap is known as the protection gap. Structurally, it is no different from Chicago 150 years ago, where not even half of homeowners held insurance.

Through it all, the marketplace that began in a coffeehouse keeps turning. In the first half of 2026, the Lloyd's market wrote £34.7 billion in gross written premiums, delivering a combined ratio of 90.8% and a pre-tax profit of £3.5 billion. A combined ratio below 100% means its underwriting operations posted a profit. The Loss Book that began at the Royal Exchange is still inscribed today with quill and ink. Across hundreds of years, the question that has continually revised its answer remains a single one: Whose risk, borne by whom, and at what price? There is no need to predict the future. You only need to watch one place: what moves in to fill the space when the private sector pulls back from risks it deems unpriceable.

Worth remembering This is not a prophecy, but a spectator's guide: you only need to watch one thing—what steps in to fill the void when the private sector pulls back.