One of the earliest forms of the modern type of insurance we are familiar with today can be traced back to The Great Fire of London in 1666, which devoured more than 13,200 houses and businesses, at an estimated cost to the City of B#10m. This was totally devastating financially as the annual income for London at that time was a mere B#13,000!
Rebuilding a Great City
As a result of the fire, London had to be almost totally reconstructed. Initially this meant temporary buildings, which were makeshift, ill equipped and disease easily spread. Many people died from this and the harsh winter that followed. However, one benefit from this tragedy was that the black plague, which had killed many people, was eliminated by the burning down of diseased, rat-infested properties.
So, how did London cope with the severe cost of re-building and getting this great City moving again? Neither King Charles II not the City of London itself had the money for this scale of compensation. In fact, the City was heavily in debt, made worse by the scale of devastation and its subsequent loss of income from the businesses and householders whose property was destroyed. This loss of income also made rebuilding quickly of paramount importance. A double-edged sword you could say.
A Levy on Coal
The City of London officials were responsible for implementing the new building regulations as well as rebuilding public buildings lost in the fire. Parliament voted for the City to receive a levy from the import of coal to help pay some of the extra expenses involved. In fact, it was used to help pay for all that was needed to be done.
London was England’s capital city, the third biggest in Europe, the hub of the nation’s prestige, government and economic power. To have left it in ruin, to have rebuilt slowly or unsurely, would have been to damage England on many levels.
The Fire Office
So, The Great Fire of London was a big lesson learned for the need for buildings to be ‘insured’ against such disasters, and also paved the way for various types of ‘specialised insurance’ to be introduced.
In the aftermath of The Great Fire, Nicholas Barbon opened an office to insure buildings. In 1680, he established England’s first fire insurance company, “The Fire Office,” to insure brick and frame homes.