Where and when did insurance start?
More than two thousand years ago, the first countries to use insurance were China and Babylon. It was also used to gain efficient control over income in that society at that time. There is no doubt that the setup of such a sophisticated insurance system came from a very well-organized society where the leaders were smart enough to collect statistics about their society, most likely using a census of some sort. They realized that there were frequent problems with the traffic of merchandise from one place to another, due to pirate attacks, thieves, accidents, loss of merchandise, etc. Their solution to these problems was to come up with a way for goods to be protected against crimes and losses (the modern-day insurance business).
Finding the best way to get protection from accidents
In 1800 in the United States, the development of the railroad and steamboat facilitated the beginning of a more rapid social development as well. All this development brought a lot of accidents, including work-related accidents from jobs in factories. It was difficult for families to face this new situation because they were poor, and did not have enough money to solve all these new problems. By 1850, the first accident insurance plan was offered by Franklin Health Assurance Co., the first insurance firm in the United States. People realized that it was very difficult to assist any family member in the case of an accident, so they started to look for a way to be protected from these accidents. Insurance companies achieved this by having people pay a small amount of money so that they can collect a larger sum, should they ever need to be involved in an accident. Just 16 years later, there were 60 insurance companies all over the nation.
The first state to declare “mandatory” auto insurance
In 1900 in the United States, the development of the automotive industry sped up, and so did the rate of car accidents as a result. Not many people realized how important it was to have protection of their assets until they were involved in a car accident. At this time, it was not mandatory to have car insurance, but when people realized how valuable it could be, there was a boom in the industry. In 1956, Massachusetts became the first state to require car insurance by law before people even got their driver’s license. A few years later, it was mandatory to have auto insurance all over the nation, and that brought a big change and order to society.
There is no way to eliminate “mandatory” auto Insurance
Developed countries have insurance for everything. “The more, the better” is the philosophy in many of these countries. In the most developed countries, auto insurance has to be mandatory. Every year in the United States, for example, there are millions of car accidents with more than two million injuries and 30,000 deaths per year. Until now, the only way to solve so many problems is with an efficient, mandatory car insurance system. Some people think that the perfect situation would be to make “liability car Insurance” mandatory for everyone, but that would cost too much money and only a small percentage of the population could afford it. If governments would help people pay for it, many problems would be solved immediately.
Chaos would reign without auto insurance
Take a look at any developing country: the insurance services are poor, or they work in a very inefficient way, or insurance simply doesn’t exist. In Cuba, where there are a lot of American cars and most of them are more than 50 years old, owners of those cars do not have any car insurance and face a lot of problems daily. They have to have their own version of “insurance” where they have to put money “under the pillow” just in case they get involved in an accident or the car has any mechanical problem. They have to have money for all types of situations, which can be very stressful and chaotic.
Auto insurance will not always be mandatory
The good news is that in the near future, auto insurance will not be mandatory. With new technology in the auto industry, accidents are going to almost be a thing of the past. In the future, cars are going to be so “smart” that they will process all kinds of information in real time. For example, they will have the exact information about all movement around them, maybe in a two-kilometer radius. For instance, if a big truck is coming at you from the opposite direction, your car will know the situation of the driver of this truck, it will know if the driver is drunk or if he’s tired, or if the truck has any problem with the brakes, and both cars will know these things with enough time to act and avoid an accident.
The bad news…
The bad news is that we don’t know when this “near future” will be here. Well, better sooner than later, and later than never. In the meantime, I would recommend everyone to get a liability car insurance policy.