Posts Tagged ‘insurance’

Lessons from the Insurance Industry

Gambling and the Law®

by , Jun 23, 2013 | 1:00 pm

I. Nelson Rose

I. Nelson Rose

Licensed gaming is slowly becoming just another legal business; which is a very good thing.

Many of the strangest restrictions in the law arose from centuries of gambling being seen by society, or at least by opinion-leaders and law-makers, as an activity that was simply not respectable.  Gambling debts were unenforceable, and courts would no more allow casinos to advertise than they would brothels.  A gaming license was similar to James Bond’s “license to kill”:  It merely protected the operator from being prosecuted for what was otherwise an illegal act.

In the past, other industries struggled with becoming respectable in the eyes of the law.  This usually took the route of trying to show they were not forms of gambling, even if they were.  They also knew they had to come up with arguments on why they were actually good for society.  The best examples are trading in securities and commodity futures, and insurance.

Insurance is, of course, gambling.

Insurance eventually overcame its gambling roots because it was seen as creating a benefit for the general public, as an efficient way of spreading and lessening risk.

Looking just at the required three elements, insurance has prize, chance and consideration.  After all, a policy holder is merely betting a small sum with the expectation of winning a larger sum if a certain contingent future event occurs.

Systems similar to modern insurance are at least 3,500 years old.  Shippers, merchants and financiers developed schemes to share the risk and spread unexpected losses caused by pirates and shipwrecks.

Insurance as a separate contract first developed in Genoa in the 14th century, and was again focused on marine shipping.  The long history of maritime insurance made it the least susceptible of being viewed as merely gambling in more modern times.

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