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The problem was bandits. And storms. In ancient Mesopotamia, a merchant sending cargo across the sea stood to lose everything they had in a single voyage. So, along with financial types, they cooked up a workaround: the merchants would borrow money to finance the voyage, paying exorbitant interest rates. Lenders accepted the exorbitant rates, but agreed to cancel the debt if a ship went down. At scale, the math worked, with merchants giving up some cash but staying whole, and lenders earning enough money overall to accept some losses. This system, the earliest known version of insurance, comes down to us from the Code of Hammurabi (and the term for it, “bottomry,” is still used today).
When, in the 1680s, Edward Lloyd opened a London coffee house where merchants could scrawl their names under shipping risks — literally under-writing them — he created what would become the largest insurance market in the world. What has changed, in the centuries since Lloyd's was founded, is everything else: the specific risks, the sheer scale, and the items worth insuring, from actress’s legs to crypto wallets. We’ll cover the rest below.
12: The approximate number of distinct, overlapping systems through which Americans get health coverage — employer plans, Medicare, Medicaid, ACA marketplaces, COBRA, Medicare Advantage, Medigap, and more — each with its own rules, each incompatible with the others.
12%: How much U.S. auto insurance rates rose in 2025, after rising double digits in 2023 and 2024, too.
$27,000: Average cost, annually, of a family health insurance plan in the U.S. as of 2025.
$21 million: Apparent amount for which Kim Kardashian insured her butt, at Kanye’s urging, when
they were married, at least according to persistent rumors.
$8 trillion: Dollar value of the total insurance industry worldwide as of 2024, making it one of the largest on earth.
Nowadays we have insurance for everything — though more in the sense it exists than it applies to us, personally. Kidnap and ransom policies are, for instance, a real product, purchased by real people, alongside the more mundane and better known home, auto, life, travel, flood, etc. Somewhere, someone has written a policy for nearly every form of uncertainty the market can imagine, and where no policy exists, there's probably a prediction market. The line between insuring a risk and betting on one has always been thinner than we like to pretend.
What's easy to miss is that insurance stopped being primarily a service a long time ago. Arguably, the real business is what happens between the moment you pay your premium and the moment — if it ever comes — that you file a claim. That gap is called float, and insurers invest it. Warren Buffett turned Berkshire Hathaway $BRK.B into a trillion-dollar enterprise essentially by understanding this: insurance is the pretext; asset management is the business. Global insurers now hold north of $40 trillion in assets, making them among the largest institutional investors on earth.
Which makes what's happened to American health insurance all the more bizarre. Every other developed country runs health risk through a large, stable pool — the basic logic of bottomry, updated for the 21st century. The U.S. runs it through roughly a dozen overlapping, incompatible systems, each with its own rules, incentives, and gaps, while leaving 26 million people right out. In other words, we treat a population-level risk like an individual-market commodity, and wonder why it doesn’t work. Even the ancients knew better. They understood that the pool has to be big enough to work — and that it’s expensive to only insure the ships you expect to sink.
“Peace of mind for you and your family.”
—The eternal sales pitch for life insurance, unchanging since the time of Hammurabi (probably)
1666: The Great Fire of London destroys 13,000 homes. In its wake, the first fire insurance companies emerge, complete with their own private fire brigades, which only extinguish fires on insured buildings. Metal plaques on your door told firefighters whether to save your house or let it burn.
1840s: The predecessor company to New York Life writes policies insuring the lives of enslaved coal miners in central Virginia. The enslaved person was the asset. The slaveholder held the policy and collected on their death. This is probably as dark as anything ever gets.
1912: The Titanic sinks. Lloyd's pays all claims within 30 days. Several individual underwriters are nearly bankrupted. No ship had ever ruined so many wealthy men at once.
1945: Congress passes the McCarran-Ferguson Act, cementing state-by-state insurance regulation after a Supreme Court ruling threatened federal oversight. The industry apparently preferred 50 regulators to one. It got them, and the fragmentation that followed.
2026: Enhanced ACA premium tax credits, introduced during COVID and extended through 2025, expired on January 1 after Congress failed to renew them. The problem isn't just affordability for the poor; it's pool logic. The CBO projects nearly 4 million people will lose marketplace coverage — overwhelmingly younger, healthier people who decide they’d rather get a sandwich now and then. This makes coverage pricier for everyone who stays.
Lloyd's of London — originally founded in that 1680s coffee house — has since insured Dolly Parton's breasts, Bruce Springsteen's voice, a food critic's taste buds, and a hole-in-one competition where the prize was a million dollars. There's an entire corner of the insurance world called "specialty" or "unusual risk" underwriting, and Lloyd's is basically the venue of last resort for anything too strange for a normal policy. If you can describe the risk, someone at Lloyd's will price it.
The Kim Kardashian of her time? Betty Grable's legs were insured for $1 million and called a "major Hollywood landmark" by Life Magazine in 1943. The face of the actress appeared in only a few of the accompanying photos. So, nothing objectifying.
