Civilization / Society, Economy & Law

Insurance & Risk Pooling

Merchants pool risk (Lloyd's, by 1688) and price it with mortality tables: uncertainty becomes something that can be bought and sold.

Marine insurance existed in Italian cities by the 14th century, and by 1688 Edward Lloyd's coffeehouse in London was the meeting place of ship underwriters. Edmond Halley's mortality table of 1693 showed how to price life annuities, and the Equitable Society (1762) was the first to charge premiums by age on that basis. The mathematics of chance from Pascal and Fermat's letters now protected ships, houses and families.