The Long, Troubled History of Insurance

The concept of insurance has existed for thousands of years, dating back to early societies like the Babylonians, Greeks, and Romans. Modern insurance developed over the last few centuries, and began to reveal some of the pitfalls facing consumers. Those troubles have persisted over the last few decades, as the insurance industry has changed drastically, arguably becoming less consumer friendly.

Modern insurance began to take shape in 17th century Europe, in the form of property, business, and life insurance, mainly protecting against fire damage. But this first foray into comprehensive coverage wasn’t without its flaws. Insurance carriers would supply the insured with branded cards indicating they would be protected. However, during this period insurance carriers actually employed their own private fire departments, which would often ignore burning buildings if the owners couldn’t immediately verify they maintained a policy with the company.

In the 19th century, railways paved the way for accident insurance to address an increase in passenger fatalities. According to these policies, passengers would receive basic accident insurance along with their tickets. Still, second- and third-class passengers were required to pay higher insurance premiums because insurers considered them high liability.

Fast forward once more to the 1990s and the sea change that took place when private companies went public. These new big insurance companies became trillion-dollar entrenched defendants, making it difficult for consumers to fight for fair settlements. Data shows how insurers took a systematic approach to delaying and denying claims settlements in an effort to turn claims, once viewed as cost centers, into profit centers. According to A.M. Best data, in 1987 insurance companies paid out 71 cents of every premium dollar paid, but by 2014 payouts had dwindled to 57 cents of every dollar. Insurance companies figured out they could often get away with lowball, early-settlement offers when customers needed quick cash.

The historic timeline of insurance shows how insurers have maintained a big advantage over individual consumers. Even today, many Americans live paycheck to paycheck, and studies like this Harris Poll-Oasis Financial survey show many don’t have enough saved to cover an emergency.

That’s why consumer legal funding continues play a vital role for consumers across the country. Funding provides consumers the wherewithal to hold out for a fair offer from an insurance company. It also provides a lifeline to cover living expenses, medical bills, and other costs that lowball early-settlement offers often don’t. Consumer legal funding remains one of the best tools to fight for what’s fair and to level the playing field with insurers, who have historically held the upper hand.