Historical background of the insurance industry in the United States

The insurance activity shyly began a few years before the declaration of independence of the United States in 1776. It is at the end of the Second World War that American insurance has taken off.

As of 31 December 2021, there were 6 000 local companies that account for 50% of the world’s premiums. With a turnover of 2 732.9 billion USD, the United States was established as the first insurance market for all classes of business, tailed by China, an emerging power.

This long march towards the first spot by the United States is owed to a particular organization and a surprising institutional framework.

• 1735:
  Friendly Society, the first insurance company in the United States, was established in Charleston, South Carolina. This mutual insurance company went out of business in 1740.
• 1752:
  Establishment of the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, the oldest insurance carrier in continuous operation in the United States. Benjamin Franklin ⁽¹⁾, one of the founding fathers of the United States, is the promoter
• 1759:
  Establishment of the Presbyterian Ministers’ Fund, the first life insurance company in the colony still under English domination
• 1776:
  Establishment of Charleston Insurance Company and South Carolina Insurance Company, the first two USA marine insurance companies.
• 1792:
  Establishment of Insurance Company of North America, the first stock insurance company in the United States.
• 1813:
  Signature of the first recorded fire reinsurance agreement between Eagle Fire Insurance Company of New York and Union Insurance Company.
• 1849:
  New York passed the first general insurance law in the USA
• 1850:
  Franklin Health Assurance Company of Massachusetts commercialized the first accident and health insurance
• 1851:
  New Hampshire created the first formal agency to regulate insurance in the United States
• 1861:
  First war-risk insurance policies were issued, written by life insurance companies during the Civil War.
• 1866:
  Hartford Steam Boiler Inspection and Insurance Company, the first boiler insurance company, was established
• 1871:
  National Insurance Conference met for the first time: representatives from 19 States developed regulator goals, uniform accounting standards, guidelines for taxation and model laws
• 1873:
  The Massachusetts Legislature adopted the first standard fire insurance policy
• 1890:
  - First policies providing benefits for disabilities from specific diseases were offered.
  - Adoption of Sherman Antitrust Act that imposes free competition.
• 1898:
  Travelers Insurance Company issued the first automobile insurance policy in the United States.
• 1910:
  New York passed the first United States workers’ compensation law. It was later found to be unconstitutional.
• 1912:
  Following the sinking of the Titanic, Northwestern Mutual paid out 500 000 USD in death benefits to 13 different policyholders
• 1925:
  Massachusetts passed the first compulsory automobile insurance legislation
• 1938:
  Federal Crop Insurance Act created the first federal crop insurance program.
• 1940:
  The legs of actress Betty Grable insured for 2 million USD
• 1945:
  McCarran-Ferguson Act (Public Law 15) was enacted. It provided the insurance industry with a limited exemption to federal antitrust law, assuring the pre-eminence of state regulation of the industry.
• 1947:
  Establishment of the Motor Vehicle Liability Security Fund, first motor guaranty funds to cover motor insurance company insolvencies.
• 1950:
  First package insurance policies for homeowners’ coverage were introduced.
• 1968:
  The federal flood insurance program was established with the passage of the National Flood Insurance Act.
• 1971:
  Massachusetts became the first State to establish a true no-fault automobile insurance plan.
• 1974:
  Hawaii became first U.S. State to enact a law creating a near universal healthcare coverage system.
• 1985:
  - Montana became the first State to forbid gender-based discrimination in the setting of insurance rates.
  - Mission Insurance Group failed. The insolvency incurred the largest payout by state guaranty funds for a single property/casualty insurance company failure.
  - The insolvencies in the 1980s led to stricter state regulation of insurer solvency.
• 1997:
  World Trade Organization agreement to dismantle barriers to trade in financial services was signed by the United States.
• 2001:
  September 11th: Collapse of the World Trade Center in New York City, 2 976 casualties and an estimated 40 billion USD in insured losses.
• 2002:
  Terrorism Risk Insurance Act enacted.
• 2004:
  New York Attorney General Eliot Spitzer launched investigations into insurance industry sales and accounting practices.
• 2008:
  The Federal Reserve Bank acquired a 79% stake in American International Group (AIG). A loan of 205 billion USD granted by the FED.
• 2010:
  - President Obama signed the Patient Protection and Affordable Care Act, requiring most U.S. citizens to have health insurance.
  - Dodd–Frank Wall Street Reform and Consumer Protection Act. Law reforming the financial market following the financial crisis of 2008.
• 2012:
  -Nevada became the first State to approve a license to test self-driving cars on public roads.
  -Legislation passed on the Biggert-Waters Flood Reform Act, which requires flood insurance rates to better reflect risk.
• 2013:
  Interest in cyber risk insurance increases following several monumental computer breaches at Target, Home Depot and JPMorgan Chase.
• 2014:
  California and Colorado become the first states to clarify liability for drivers of paid ride-sharing services such as UberX and Lyft.

⁽¹⁾ American politician, he participated in the drafting of the Declaration of Independence of the United States, of which he was one of the signatories, which makes him one of the Founding Fathers of the United States.

The rapid growth of the Internet has been the defining factor for the U.S. insurance industry in recent years. The explosion of online sales has fundamentally changed the distribution of insurance products.

The global reach of the Internet has also led to consolidation and mergers among financial services companies competing in a globalized market.