Purpose, history and economic importance of insurance in Europe.

Why do we need insurance?

It is indeed true to say that ever since they were first established, insurers have been faced with the challenge of demonstrating that they are an essential part of any smoothly functioning economy. Insurance companies basically perform the function of covering financial risks that individuals or businesses would be unable to manage because they lack the necessary funds.

Once the premium is paid, the risk is transferred from the policyholder to the insurance company. If a loss or damage occurs, the insurer pays the costs incurred and the policyholder is thus released from this financial obligation. This provides a greater opportunity for individuals and commercial enterprises to take risks. This service that insurers provide boosts long-term economic development and technological progress.

It is hard to imagine today’s constantly changing world without insurance companies. Living in a society that poses many risks, people increasingly feel the need for safety and security. Insurers fulfil this need and provide immediate support if a loss or damage occurs. Insurance also offers people reliable and long-term financial provision for their retirement, with life insurers guaranteeing their policyholders a form of private pension.

Portrait Ruken Baysal

Your Local Guide

Ruken Baysal

joined Baloise in 2009. In 2017 she became Head of Group CEO Office of Baloise.


Tell us about the history of insurance.

The origins of insurance date back to antiquity. Caravan travellers in ancient Babylon agreed to pool their resources in order to cover any loss or damage suffered by individuals on these journeys. This idea of solidarity was re-adopted much later in a slightly modified form. Merchants in 14th century Genoa started to take out marine insurance to protect their cargo financially against losses at sea. Insurance against other kinds of loss or damage – such as that caused by fire – eventually began to evolve. The first life insurance policies appeared in Great Britain towards the end of the 18th century. 

Insurance in Switzerland

It was only much later that insurance was introduced in Switzerland and, consequently, that Baloise was established. The birth of insurance in Switzerland was triggered by a fire that devastated the Swiss town of Glarus during the night of 10 / 11 May 1861. Two-thirds of the town was destroyed and half of its inhabitants were made homeless.

This event highlighted the importance of insurance and was directly responsible for the establishment of many Swiss insurance companies that are still in existence to this day. Baloise was founded on 2 May 1863 and – in common with most Swiss insurers – was initially set up as a fire insurance company (Basler Versicherungs-Gesellschaft gegen Feuerschaden); Basler Leben (Baloise Life) and Basler Transport (Baloise Marine) followed on 24 December 1864. 

Alte Fotografie der Stadt Glarus, in der ein Brand gewütet hat
The devastated Swiss town of Glarus in 1861.

Adapt to the market

Bild Eingang Tresoranlage
The underground vault in Saanen.

This demonstrated how the Company was broadening its insurance offering to include other areas. At the beginning of the 20th century, as technological advances altered the nature of the risks that people faced, Baloise adapted its product range in line with changing circumstances.

The outbreak of the First World War severely constrained insurance companies’ nascent international business operations, while the Spanish flu pandemic doubled the number of deaths insured by Basler Leben in 1918.

Equally momentous events for Baloise were the German hyperinflation of 1923 and the Second World War. One impressive feat was how during this period Baloise stored 700,000 insurance policies in a specially built underground vault in Saanen, a small village in Switzerland, to keep them safe. The new Spitzhorn Hotel has been located here since December 2013.


Expansion abroad

Business in other European countries started to pick up again after the war, with Baloise continuing to expand its operations abroad; by around 1960 it was represented in 51 countries, but had a small share of the market in some of them. Today, Baloise focuses on the four countries of Switzerland, Germany, Belgium and Luxembourg. As a former global player, Basler also shared in world-famous claims, such as the sinking of the Titanic.

Baloise has undergone a huge transformation over the course of the 150 or so years since it was founded, evolving from a company that was originally set up to insure against fire damage to a provider that covers an extremely wide range of risks. The insurance industry has had to adapt to the developments and shifting circumstances prevailing at the time, and it has helped to define our modern-day concept of insurance as well as how we deal with risk and try to prevent it.

Alte Fotografie der untergehenden Titanic
The sinking of the Titanic on 15 April 1912. In today's money, Basler's share of the loss was CHF 40 million.

What is the economic importance of insurance?

Insurers play a key role in the European economy. In addition to providing a safety and security mechanism that functions smoothly, they also offer a partnership that enables companies and individuals to take risks and engage in business activity. By providing this financial security, they support free market enterprise. This intensified business activity drives macroeconomic growth, which in turn benefits society – for example by creating new jobs.

Moreover, insurers mitigate the effects of unforeseeable events such as sickness, accidents, death or natural disasters by assisting policyholders at least financially when the event occurs. By covering various eventualities, insurers also help to maintain individuals’ purchasing power, which leads to financial stability.

Likewise, policyholders stimulate economic growth and enhance financial stability by investing for the long term. The total ➯ investments made by insurance companies in 2015 amounted to roughly EUR 9,800 billion. Insurers work closely with banks to facilitate lending by channelling savings into long-term investments, thereby enhancing transparency and liquidity in financial markets.

Insurance companies also use their preventative function to influence product safety by flagging up existing risks and safety issues. Furthermore, insurers are of crucial economic importance in terms of their impact on the labour market. It is estimated that 975,000 people were directly employed at roughly 3,700 insurance companies across Europe during the past year and that the same number again were indirectly employed by insurers. That makes almost two million people who work in the European insurance industry!

Did you know...?


Every year people in Switzerland spend an average of around CHF7'280 (approx. EUR 6'810), on insurance. Worldwide, only the Cayman Islands spend more (approx. EUR 11'667 per year).


The German insurance market is one of the largest in Europe, generating annual premium income in excess of EUR 175 billion.


Belgium is a so-called brokerage market. A large proportion of insurance policies are sold through these independent agents.


The proportion of motor vehicle insurance policies sold in Luxembourg that offer fully comprehensive cover is very high compared with other countries (roughly 60 per cent).

The journey continues

How insurance works

How does insurance actually work?

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Non-life business

How does an insurance company’s non-life business work?

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Claims reserves

Why do insurance companies need claims reserves?

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