Risk Management

THE INSURANCE MINEFIELD

In a connected modern world, we're increasingly being measured through the medium of probability and data analytics. With insurance policies, our risk levels are being assessed with complicated algorithms made up from big data collected and analysed from across the globe.

There's a measure of risk in everything we do. Driving, travelling and partaking in adrenalin sports. All have their own specific risk factors and therefore a quote will need to be worked out for the individual based on certain factors. We're encouraged to get life cover for taking out mortgages and accident cover for lost income but if we add up all the different insurance cover we have, it amounts to a lot of money. Why is there no single insurance for everything we do? Simple answer - because insurance as it turns out, has made some of the richest men in history and created massive empires for those who have controlled the money markets. All based on fear and carefully considered figures worked out to balance against how much we're prepared to pay for countering against potential loss.

Barter, Trade & Coffee Houses 
Insurance history dates back to very early human society. But it was likely the 17th century and around the time of The Great Fire of London, when the first modern property insurance companies were set up. It was allocating fire fighting agencies to protect their insured property, that the insurance industry has seen it's greatest changes and commenced a period for making a great deal of money for the people that run these organisations. 

RSA or Royal Sun Alliance, has been around in its earliest guise since 1710 and Nathan Mayer Rothschild, who had a stake in the early Sun Alliance from 1824, was an astute financier who as legend tells it, made a fortune from the stock market by creating panic after the battle of Waterloo to buy back shares at rock bottom prices. Nathan was reputedly a very calculated character who built up such massive wealth and power that he was able to supply enough coin to the Bank of England, so to avoid a liquidity crises. The Rothschild dynasty is still influencing the global banking industry 200 years on.

Business insurance also saw a boom in the late 1600's with the emergence of coffee shops where stock and insurance deals were settled. Lloyds insurance started out as a coffee shop, where deals setting insurance for ships carrying cargo were brokered and Jonathan's Coffee House formed the early location of the London Stock Exchange.

With natural disasters and lawsuits taking great chunks from insurance firms in recent years - almost bringing to collapse one of the oldest mutual insurers, Equitable Life, insurance policies have become much more of a minefield to navigate. When considering taking out an insurance policy, everything needs to be thoroughly checked. Not reading the small print could mean that if and when a claim is to be made - the right kind of cover may not be in place. This is something I found when checking through my travel policy before travelling abroad this weekend.

I'm travelling to The Alps for some alpine riding which I thought was in my policy. But it's a different 'kind' of riding and therefore, I was not covered for full European medical cover should I need an airlift off a mountain, and my bike, my mobile phone and my iPad are not covered too on this travel policy either. This meant I had to pay an extra amount for three bolt-on premiums which was the equivalent of paying half again what I pay for annual travel insurance. Although I hope I won't ever need to use insurance - the genius in how these companies now work is that in many cases, you have to get cover in order to travel, drive, take out a mortgage or take part in adrenalin sports - but maybe one day, everything will be contained in just one policy. Until that day comes, check the small print!