What modern reinsurance and artificial intelligence achieve has deeper historical roots than you might think. A look back to the time of the Code of Hammurabi shows: Dealing with risk has followed similar principles for thousands of years, only the tools have changed.
Sometimes the best insights come from unexpected moments. During a masterclass high in the Swiss Alps, led by Shlomo Mintz, the young Alma Deutscher plays the violin. An exceptional musical talent, she is just seven years old and has already composed her first sonata.
The mental leap from this scene leads far back into history, namely to her father, the linguist Guy Deutscher, and on to the ancient sites of Mesopotamia. There, recorded in cuneiform script, we find early forms of what we would today call risk management.
The Codex Hammurabi, written around 1750 BC, already contains regulations that address economic insecurity. Merchants who took out loans for caravans were exempt from repayment if their goods were lost through robbery or force majeure. Lenders in turn compensated for this risk by adding surcharges to the interest rate.
Artificial intelligence as an accelerator
Today, artificial intelligence takes on tasks that used to require months of intensive research. Deciphering cuneiform script, once laborious detailed work, can now be done in minutes. There is an obvious parallel to the insurance industry: here, too, algorithms now analyze complex contracts from different countries and legal systems within a very short space of time.
For underwriters, this means a shift in their role. The focus is shifting away from pure data preparation towards content-related evaluation and strategic decision-making. Technology is thus becoming an enabler, not a substitute for human expertise.
Insurance-linked securities: innovation with a history
Insurance-linked securities (ILS) are a particularly topical example of this development. These financial instruments make it possible to transfer insurance risks, such as natural disasters, to the capital market. Investors receive a premium in return, but lose all or part of their invested capital if a defined loss event occurs.
At first glance, this model looks like an innovation from the 1990s. However, it actually follows the same basic principle as the regulations in the Codex Hammurabi: risk is distributed and the assumption of uncertainty is financially rewarded.
Continuity in change
The oft-quoted Latin expression “Nihil Novi Sub Sole” – nothing new under the sun – also applies to the world of insurance. The instruments may change, but the logic behind them remains surprisingly constant.
What has changed fundamentally, however, is speed and scalability. Artificial intelligence, global capital markets and standardized products such as ILS now enable a level of efficiency that was unthinkable just a few decades ago.
For the industry, this not only means progress, but also responsibility. Because the faster and more complex the systems become, the more important it is to understand their historical and structural foundations.
Binci Heeb
Paul the Insurer has other content that may interest you, such as the series of interviews with insurance industry executives.
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