Insurance is elementally a form of risk management acquired as a hedge against the possibility of loss. Thus, it consists of  the transfer of risk from the insured – being the policyholder, person or entity buying the insurance -- to the insurer -- or company selling it -- in exchange for an equitable payment in the form of a premium.

The earliest and most primitive form of insurance is still with us as exemplified by the traditional Amish barn raising, whereby a community seeks to “make whole” any one of its members who has suffered a devastating loss. Insurance in the modern sense if its being part of a functioning money economy had later (albeit quite early) beginnings, going back to a time thousands of years before Christ when the Babylonians developed a system whereby a merchant receiving a loan to fund a shipment would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be lost or stolen. Around 66 A.D., the Romans and Greeks introduced forms of life and health insurance.

Perhaps the origin of insurance now most familiar to us arose after London’s Great Fire of 1666 laid waste to some 13,000 houses, prompting Sir Christopher Wren to include an “insurance office” in his new plan for London a year later. Lloyd’s of London, which was primarily involved in maritime insurance, opened in a London coffee house late in the 1680s and – having moved to larger quarters – is still with us today.