The first big insurance markets were maritime, and the reasons were evident. Very lucrative cargos, but every so often they might be lost.Quite often the insurers were also in the business, so they had a good idea of what and who they were underwriting.

The essence of insurance is "underwriting risks" -- in order to do that, the insurer has to inspect the insured property (or person), and evaluate its condition. As the saying goes "no one writes insurance on a house on fire".

In its earliest forms, like the Roman "marine loan", the insurance wasn't so clearly distinguished from equity participation, but in time the distinction between people whose business is shipping, and people whose business is financing and insuring shipping grew. The essence of commercial insurance isn't that different from debt and equity-- its taking one venture with some amount of risk of loss and potential for profit, and slicing up these possibilities for risk or gain and selling them off to people who want that slice. The first contracts that really look more like insurance than a loan were written in Renaissance Italy, Genoa in the 1340s is where we first see the formulation "I'll pay you X florins if your cargo doesn't safely arrive at destination Y"

Life insurance as we know it dates from 1706 (the Amicable Society for a Perpetual Assurance Office in London) and you get various forms of property insurance around the same time.

In one of the grisliest stories of insurance, New York Times reporter Rachel Swarns has written recently about how a predecessor to today's New York Life Insurance company wrote policies on slaves for their masters-- effectively property insurance. They've even got records of the medical exams that the company had done before writing a policy.

So, from earliest days, writers of insurance or similar contracts have been evaluating the insured property (or person) and for a fee writing a contract that would pay off in the event of some loss.

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sources:

The Earliest Insurance Contract. A New Discovery

Outlines of a General Economic History of Insurance

The Sea Loan in Genoa in the Twelfth Century

Nautilus Insurance Company Slavery Era Ledgers

Insurance Policies on Slaves: New York Life’s Complicated Past

Amicable Society for a Perpetual Assurance Office

Moral Hazard and the Assessment of Insurance Risk in Eighteenth- and Early-Nineteenth-Century Britain

Provincializing Rome: The Indian Ocean Trade Network and Roman Imperialism

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