In as far as humans have existed, they have faced risks to their lives and the resources they depend on for survival. What is more, every journey, metaphorical or literal, has required taking on some risks. The more the possibility of hedging these risks, thus, the more likely one will take them.
This is why merchants and sailors are willing to traverse the high seas, braving adverse weather conditions and sea perils, to trade. Together with the availability for insuring one’s property, the appetite to trade grew side-by-side. Once the Europeans began developing it, and its importance to realising competitiveness was recognised, there have been leaps and bounds in the development of modern insurance and risk management theories, principles and philosophies.
Ferdinand Magellan might have faced the sea perils with no possible protection from financial loss, but since Edward Lloyd opened a coffee house where merchants were willing to underwrite one another, the world has not been the same.
The importance of insurance is re-asserting itself in 2020. Act of god accidents, from wildfires to tornadoes, and human-made disasters, including arguably the Novel Coronavirus (COVID-19) pandemic, have been the main news of the year. We are now seeing a unique and turbulent time for insurers everywhere as a matter of the magnitude of impact and complexity of such risks. Insurers may, therefore, find themselves in a state of bewilderment and immersed in a dilemma on how this much can be insured.
But governments often find it to their advantage to ensure that their citizens are protected from loss during such times. This is why, in most of the world, health insurance is popular. People are willing to pay not just through their wallets to be insured but through the ballot box as well.