Code Of Hammurabi Case Study

allocate some proportion of their goods to the owner who faced a loss. Code of Hammurabi is the first written regulation of risk allocation and damage coverage while the first regulations of maritime insurance can be found in the Talmud. Talmud regulates that the owner who loses a ship without own fault has the right to get a new ship from the shipping community (Andrijašević and Petranović 1999).

The first known insurance contract dates back to 1347 and is concluded in the form of notary document. The first insurance policy dates back to 1384, and was published in Pisa.

Foundations of life insurance date back to the Middle Ages. Guilds were paying the certain amount of funds to families in the case of member’s death (in the name of assistance).

Premiums were calculated every year and were hardly affordable in old ages. In order to calculate the premium based on the likelihood of the death, it was necessary to create mortality tables.

3.2. Main characteristics of life insurance

Life policies protect insured persons and their families in the case of accident. Life insurance policies are specific financial products important not only for policyholders, insured and insurers but also for the economy as a whole. It enables the accumulation of long-term funds that can be used for investment. This fact stimulates governments to promote life insurance development through tax relief.

Insurance policy does not provide protection against death rather it provides protection against premature death and old age. Additional characteristics of life policies is no possibility of partial lose (what is the case in property-liability insurance). If the insured event occurs, life insurer pays the full amount of benefit (Vaughan and Vaughan 2000).

To sum up, the main characteristics of life insurance

3.3. Actuarial basis of life insurance

This part of dissertation presents actuarial basis of life insurance concerning the determinants of life insurance development, types of life insurance products in actuarial mathematics literature, gross premium and mathematical reserve.

3.3.1. Determinants of life insurance development

Kozarević (2010) emphasizes various determinants of life insurance development:

• The level of social insurance development;

• The level of economic growth,

• Tax treatment of life insurance,

• The stability of the national currency and

• Financial system development.

3.3.1.1. The level of social insurance development

The life insurance development in one country is generally inversely proportional to the development of social security programs (Kozarević 2010). Therefore as more as social insurance programs are developed, as lower as the need for life polices is. In the case when the level of social insurance development is taken as only determinant of life insurance development, wrong conclusion on the overall development of life insurance can be made. Therefore, there is a need