An Industry Born and Shaped by Disasters: How Calamities in 1666 Shaped Modern Insurance

In 1666, London was already a metropolis. It was the third biggest city in Europe; only Rome and Constantinople had greater populations.

But living in London in 1666 was no picnic.

As 1666 began, the city was in the throes of the Black Plague. The disease lasted through the summer and carried off nearly a quarter of the city’s estimated population of 460,000.

And, then, the fire: In September, 1666, a small bakery fire on Pudding Lane (wouldn’t it have been?) spiraled into a catastrophe. Over four days, what has now come down to us as the Great Fire consumed 13,200 homes, 87 churches (including the ancient St. Paul’s Cathedral), and most of the city’s core. Approximately 70,000 residents were homeless. With no organized firefighting and wooden buildings packed tight, the blaze was a wake-up call—one that not only rebuilt London but also sparked the modern insurance industry.

Before the fire, insurance was a niche game, mostly covering ships lost at sea. Property? Life? Barely a thought. But the devastation—estimated at £10 million then (just imagine today’s equivalent in dollars) exposed a glaring gap.

Enter Nicholas Barbon, a physician-turned-builder with a vision. By 1680, he’d founded the Fire Office, the first company to insure homes against fire. It was a radical idea: pay a premium, get a payout if disaster struck. Barbon even hired “firemen” to douse insured properties, blending coverage with prevention. This model didn’t stop at bricks—it paved the way for life insurance, as 1666 helped people see the value in protecting lives, too, against loss.

The ripple effects were massive and can still be seen today. London insurers, including early Lloyd’s players, essentially invented risk assessment, setting standards that spread globally. Fast forward to today, and vestiges of the legacy can still be seen.

To this day we call the process of accepting a risk to be “underwriting” it, because it was the Lloyd’s tradition that on the bottom (i.e., “under”) of the of notes of coverage, the individuals who pledges themselves to take on the risk signed (i.e., “wrote”) their names. Though we are now centuries removed, the lessons of the 1666 black plague and Great Fire still hold.

Insurance is adaptive and evolutionary—both on the property/casualty side and on the life, health, and accident side. If you doubt it, look at what the London market did in responding to the 1906 San Francisco earthquake and fire, and at how the markets here at home and in London reacted to the more recent threat of claims for cyber liability.