Flintstones to Smartphones

Here is the key takeaway of this article.

Insurance, in some form or fashion, has been with civilization for thousands of years and shall continue with us as long as risks need to shift from one party to another. Whether it be inscribing indemnity words on a stone tablet or insurance policy keystrokes on a computer tablet, the purpose is the same – to shift the risk of loss.

This article will briefly trace the parallel of human development with insurance development and their journey together.

First, we want to recognize that the social worker profession is noble and founded on service, integrity, and clinical expertise. At times, it can be a stressful and hazardous occupation. The nation is grateful for what you do. AND SO ARE WE! Thank you!

According to “The Journal of Economic Perspectives” (North, 1991, as cited in Wikipedia), insurance originated in prehistory, exchanging goods within and between nearby villages. Initially, barter and trade were the only currency, and insurance was in the form of mutual aid, such as the village people rebuilding a destroyed fellow villager’s home – giving rise to cooperatives, guilds, and ethnic proto-states, all functioning to provide mutual protection for the participants. (Fukuyama, Francis, 2011, “The Origins of Political Order: From Prehuman Times to the French Revolution”, as cited in Wikipedia).

It is the opinion of this author that human adaptability and collaboration give rise to sustainability and progress, as we shall see in this article. Indemnity was the original reason for mutual aid protection, with primal instinct focused on property loss. Legal defense costs were a relevant factor in the past century and currently flourish as a significant expense.

The concept of group participation in risk sharing, like the application of risk sharing through the law of large numbers, is very similar to a mutual insurance company and a risk retention group like Preferra, where the insureds own the insurer. The pool of participants as insureds spread the loss risk and participated in the subsequent loss sharing. The critical point is that the people who were in the cooperative pool in the village, for example, were encouraged to participate for mutual survival in adverse circumstances. The benefit was the rebuilding by the neighbors. Public granaries and village wells were the same early form of insurance indemnity against famines. Survival was key. (Szarmach, Paul; Tavormina, Teresa; and Rosenthal, Joel eds (1998) “Guilds and Fraternities, Medieval England: An Encyclopedia Vol. 3, Taylor & Francis. P.-329, 2017; as cited in Wikipedia)

Survival is the key word. Civilization depends on it, and insurance helps preserve it.

The National Library of Medicine published an applicable article that breaks down human civilization’s development into three Eras based on survival: Paleolithic, Industrial, and Leisure. (National Library of Medicine, Jan. 2018, 108(1), 60-62, American Journal of Public Health; “Three Stages of Health Encounters Over 8,000 Human Generations and How They Inform Future Public Health”; Lee Goldman, M.D.). Let’s break it down.

The Paleolithic Era was 8,000 generations ago, or around 200,000 BCE. The average life expectancy was age 33 and characterized by the need for basic survival. Infections caused 75% of deaths, and murder or violent death accounted for 15% of deaths as people competed to survive. Starvation and dehydration were significant mortality factors as well. The solution was to raise the standard of living. (Ibid)

It is reasonable to apply cooperation and organization coupled with primitive technology strides as the survival strategy. Indemnity strides also illustrated this through the development of cooperatives, mutual protection pools, and insurance from 3,000 years ago. They learned, through fear, to minimize confrontation when neither flight nor fight was possible. This article’s author interprets this behavior as the birth of the art of negotiation and cooperation to mutually resolve conflict for the betterment of all parties.

There has been a tactical shift in the market towards Risk Retention Groups like Preferra. The market shift has turned away from the top ten traditional insurance carriers in medical malpractice and Allied Health occupational risk classes. For example, in 2022, Risk Retention Groups had nearly a $100 million premium increase. (Ibid.)

A brief look at insurance history indicates that it focused on property and casualty loss risks, specifically marine insurance. Water transportation was the primary mode of transportation of property and cargo transferred by barge or ship. As loss experience and technology advanced in water transportation, so did insurance sophistication. One of the earliest examples of insurance law was the ancient Rhodian Sea-Law, which required marine shipper colleagues to collectively reimburse fellow seafarers and merchants if a colleague was forced to throw cargo overboard to save the ship in a storm. It originated on the Greek island of Rhodes as early as 1000 BCE. (Memorial Publications of the Prudential Insurance Company of America (1915); The Documentary History of Insurance, 1000 B.C. – 1875 A.D., Newark, NJ”: prudential Press; as cited by Wikipedia)

The Industrial Era, starting around 1850, as reported by the referenced National Library of Medicine article, highlights its characteristics as seven generations living to an average age of 45 to 75, pollution, manufactured hazards, smoking, motor vehicle accidents, industrial toxins, and environmental spills. The solutions included regulation and legislation. While not stated in the article, improvements in technology and organizational change were vital elements in advancing self-determination and growth.

Literature and history indicate that the world grew exponentially more complex in practically all facets, including technology, cultural complexities, and sophisticated insurance solutions. Life and Health insurance lines eventually sprouted and joined Property and Casualty insurance lines, which previously dominated the industry for thousands of years. The sector developed sophisticated savings, annuity, variable life insurance contracts, and whole life plans that joined at the hip with the regulated securities markets and industry. The insurance market grew in breadth and depth, with civilization mitigating loss risks requiring new insurance products, carrier specialization, indemnity focus, and regulation.

For example, the Preferra Risk Retention Group is a recognized expert in its niche: insuring social workers and behavioral health occupations for professional liability, general liability, and cyber liability risks. The focus is narrow, occupationally and intentionally specific, and laser-focused for the benefit of its insureds working in particular occupations. These products are within the property and casualty insurance line that has its roots 3,000 years ago, starting with marine insurance pools.

The Leisure Era, starting in the late 20th century, includes three generations. As referenced in the National Library of Medicine article, the leisure era has an average life span of 80 years, obesity, diabetes, hypertension, heart failure, and stroke. Besides today’s abundance, these medical disorders are attributable to the Paleolithic era genes that mutated to a “thrifty genotype” whereby the genes helped to store extra fat. Also, the genes evolved toward efficient clotting, which is attributable to today’s thrombotic diseases. The solutions include continued regulation, legislation, and behavioral change. (Ibid.) While not stated in the article, technological innovation is crucial. One contemporary example is that health and medical insurance were developed and became a significant part of the insurance industry.

Whatever the change in human development, like jurisprudence change (which includes the analytical, sociological, and theoretical elements of law), the insurance industry shall continue to keep pace with the evolving civilization to mitigate new loss risks and supplement property and casualty indemnification losses with increased legal defense protection. It is the opinion of this article’s author that insurance is an artifact of human existence. It is here to stay in all forms and shall continue to be heavily regulated by the states because insurance premium state tax is a major revenue driver, and insurance regulation preserves product integrity and protects the risk pool funds, which is good for policyholders.

Thank you for all that you do! Your profession is genuinely noble and needed now more than ever. Good luck, and stay healthy!