For most of history natural and man made disasters were treated as simple "Acts of God". After the event, the effected populations were left to fend for themselves. They rebuilt their lives as best they could but there was no agency or provider that could be approached for assistance. Charity was virtually unknown in any organized way. Governments were distant and not in the business of administering relief funds.
Thus, a commercial opportunity was noticed, addressed and successfully harvested. In 1670 there was a massive fire in London. It was the largest fire in history until that time. The city was, at that time the largest, most densely populated in the world. Almost all of the buildings in London were constructed of wood and were built closely together, At that time, as now, London was a very horizontally designed metropolis (New York City and Hong Kong in contrast, are much more vertically built). The fire fed upon itself and raged widely, consuming all in its path.
After the fire burnt itself out, the city of London and it's population were decimated. A prescient resident named Nicholas Barbon observed first hand the total destruction of his the metropolis. Barbon was a German trained physician. He assisted by caring for the injured but felt that something more could be done to assist people in rebuilding their physical, financial and emotional lives.
His brilliant, elegantly simple idea was to create an assurance product that could be sold in mass, at affordable rates and cover the possibility of loss by fire. Nicholas Barbon met with accountants and financiers and developed some of the earliest actuarial tables to assess and price risk. London Assurance was incorporated and was the first known entity to sell fire insurance to individuals and businesses.
In America, Benjamin Franklin started the first fire insurance company in Philadelphia in the 1760's. Franklin was an entrepreneur with a wide range of business and philanthropic interests. He was probably one of America's richest men of that era. He started the first fire department in Philadelphia at the same time. Imagine selling fire insurance for profit, and assembling a professional fire department to mitigate losses from fires. Bright fellow, no?
The great Chicago fire and the San Francisco fire of 1906 would have left these modern, beautiful metropolises with much sadder futures if the use of fire insurance had not been widely incorporated by the time they burned. Chicago is now known as "The 2nd City", not because it is secondary to New York, but because the modern city we enjoy was rebuilt on top of the burned out husk of old Chicago.
Today the use of fire insurance is ubiquitous. We must have fire insurance to secure a home loan. Cities around the world have crafted building codes to minimize fire hazards among other reasons. The assessment of fire insurance risk is an actuarial craft. Hundreds of thousands of jobs are existent because of the fire and casualty industry that Nicholas Barbon pioneered.
The genius of Nicholas Barbon in assembling the elements that successfully commercialized the fire insurance business benefit us to this day. His vision allows millions of families and businesses around the world to survive disasters and re-assemble their lives.
Everyday, in locations all over the world, entrepreneurs are working to create new products, techniques and services that can improve our lives. Ben Franklin, Thomas Edison, Bill Gates and other famous inventors are paid homage for their contributions and genius. They are worthy role models for people seeking to create new opportunities. Men like Nicholas Barbon are less obvious. And yet, the seemingly mundane creation of fire insurance is a wonderful template for us to consider as we seek to craft exciting, new innovations.
Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money. After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance. Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio. |
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