351 years ago, on Saturday 2nd September 1666, the Great Fire of London started, consuming 13,200 houses, 87 parish churches, St Paul's Cathedral, and most of the buildings of the City authorities.
The fire is estimated to have destroyed the homes of 70,000 of the City's 80,000 inhabitants. And while the death toll was verified as just six people, many hundreds more of people died in the aftermath whilst living in make shift refugee camps.
But out of this disaster was the creation of property insurance. The Association of British Insurers (ABI) reports that: A few years after the Great Fire of 1666, new insurance offices began to appear in London offering people a way to protect themselves from losses caused by fire. The first such scheme was launched by Nicholas Barbon and one of the oldest fire policies in existence, signed by him in 1682, is held at the ABI’s offices.
By 1690 1 in 10 Londoners had property insurance.
What could have been
So, what would have happened if property insurance had existed in 1666?
After the fire, claims would have been submitted by the property owners due to the damage caused by the fire.
The Property Insurer would have typically paid out on each policy for the fire damage and the city’s homes would gradually be rebuilt. The Property Insurer would look to reimburse the claims against the baker who started the fire in Pudding Lane due to negligence.
But what actually happened?
Tenants were not only expected to pay for any damage to the property (as in 1666 the contracts of tenants made them liable for repairs to their houses, not the landlords who owned the property) but also with the continuation of rent as their homes were rebuilt. This caused severe disputes and an emergency 'Fire Court' was set up to officially regulate who was responsible for funding the rebuilds.
King Charles II declared there would be collections at churches across the country for the Lord Mayor of London to distribute amongst homeless and destitute Londoners and the total raised throughout the country was over £16,400 – covering a whopping 0.13% of the damage.
But that was not enough.
Hundreds of people died in the months afterwards as they struggled to survive in refugee camps. The City was in a mess.
The Great Fire of 1666 devastated central London, but the one surprising outcome of the fire is the creation of modern property insurance.