Insurance became far more sophisticated in Enlightenment era Europe, and specialized varieties developed. Lloyd's Coffee House was the first organized market for marine insurance. Property insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667." The first life insurance policies were taken out in the early 18th century.
The first company to offer life insurance was the Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir Thomas Allen. In the late 1680s, Edward Lloyd opened a coffee house, which became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, and those willing to underwrite such ventures. By the late 19th century governments began to initiate national insurance programs against sickness and old age. These informal beginnings led to the establishment of the insurance market Lloyd's of London and several related shipping and insurance businesses. Edward Rowe Mores established the Society for Equitable Assurances on Lives and Survivorship in 1762.
It was the world's first mutual insurer and it pioneered age based premiums based on mortality rate laying "the framework for scientific insurance practice and development" and "the basis of modern life assurance upon which all life assurance schemes were subsequently based."In the late 19th century "accident insurance" began to become available. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be an insurable risk, the risk insured against must meet certain characteristics. This system was greatly expanded after the Second World War under the influence of the Beveridge Report, to form the first modern welfare state. In the 1880s Chancellor Otto von Bismarck introduced old age pensions, accident insurance and medical care that formed the basis for Germany's welfare state. Germany built on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s.
The first company to offer accident insurance was the Railway Passengers Assurance Company, formed in 1848 in England to insure against the rising number of fatalities on the nascent railway system. In Britain more extensive legislation was introduced by the Liberal government in the 1911 National Insurance Act. This gave the British working classes the first contributory system of insurance against illness and unemployment. Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. Insurance as a financial intermediary is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses. However, all exposures will have particular differences, which may lead to different premium rates.