Commercial property and casualty insurance—US perspective
Commercial property and casualty insurance—US perspective

The following Insurance & Reinsurance guidance note provides comprehensive and up to date legal information covering:

  • Commercial property and casualty insurance—US perspective
  • Background
  • Insurance Services Office
  • Property Insurance
  • Casualty Insurance
  • Multinational Programmes

Background

US commercial property casualty insurance has its roots in English marine insurance. In the 17th century, London's importance as a trade centre led to demand for the protection of ships and cargo. Increases in maritime trading and the incidences of piracy and storms meant that merchants and bankers sought ways to mitigate losses associated with such risks. Edward Lloyd's coffee house became recognised as the place to go for marine information and then for insurance. In coffee houses throughout the city of London, bankers provided guarantees against loss; in return, merchants paid the bankers a fee for this protection.

Fire insurance, developed primarily in England after the great London fire in 1666. The US property casualty insurance market evolved from British practices, with the first US fire insurer started by Benjamin Franklin in 1752. The American Revolution, followed by the Napoleonic Wars in the early 1800s, demonstrated just how vital insurance was. By the early 1900s, many major types (or lines) of insurance had developed. Today, US property casualty insurance consists of the following types:

  1. protection for physical objects, such as commercial buildings, machinery, inventory (property); and

  2. protection against legal liability (casualty)

Property insurance is a ‘first-party’ coverage. It provides for losses related to a policyholder’s own person/property. Casualty/liability insurance is a ‘third-party’ coverage. It provides protection for a policyholder