Travel insurance is a specialized type of insurance that covers financial and medical risks arising during trips outside one’s country of residence. The history of this type of insurance is directly linked to the development of transportation, trade and tourism. As people traveled farther and more frequently, the need for protection against unexpected losses became more acute. From the primitive forms of mutual assistance in ancient times to the sophisticated digital products of the 21st century, travel insurance has come a long way, adapting to new modes of transportation, new risks and new expectations of clients. In this article, we will trace the main stages of its evolution in detail to understand how it evolved from a niche product for the elite into a standard service, which is annually used by millions of people worldwide.

 

Ancient roots of insurance

 

The first documented risk-sharing practices appeared long before the Common Era. In the Code of Hammurabi (circa 1750 BCE) in Babylon, rules allowed merchants sending caravans could receive compensation for looted or lost cargo from the general fund. In ancient China, around the third century BC, merchants transporting goods by river agreed in advance to split the losses equally if some of their boats sank.

 

In Ancient Greece and Phoenicia, the so-called "marine loan obligation" was developed: a captain borrowed money against the ship and its cargo, with the condition that the debt would be cancelled if the vessel perished. Essentially, this was the forerunner of modern marine insurance. In Ancient Rome, there was a similar practice called “foenus nauticum”.

 

In the Middle Ages in Europe, guilds and religious fraternities assumed the protection of travelers and merchants. For example, in Italy in the XIV–XV centuries, Genoese and Venetian merchants drew up contracts under which several individuals would jointly bear the losses of shipwrecks. In Northern Europe, the guilds of Hanseatic cities created mutual aid funds to compensate for losses on land and sea routes. The great geographical discoveries and the era of colonial expeditions drastically increased the volume of long-distance voyages and, consequently, the risks, which prompted the creation of more formalized insurance mechanisms.

 

The appearance of modern travel insurance in the 19th century

 

A real turning point occurred in the 19th century, in the context of the Industrial Revolution. Railroads and steamships made traveling popular, but at the same time dramatically increased the risk of accidents. In Britain alone, in the 1840s–1860s, hundreds of train passengers died annually.

 

The first person who saw a business opportunity in this situation was James G. Batterson, the American entrepreneur. In 1863, he insured himself for a trip from Hartford to New York in the amount of $1000 for just 2 cents. In response to this growing trend in 1864 he founded the Travelers Insurance Company–the world's first company specializing in traveler accident insurance. The policy cost 10-25 cents and was valid for a single trip by rail or steamship.

 

In Europe, similar products appeared almost simultaneously. In 1847, the British Railway Passengers Assurance Company began selling insurance policies against railway accidents. By the 1880s, large companies like Lloyd's had already offered comprehensive policies for transatlantic voyages and long-distance expeditions. Insurance remained a product for the middle and upper classes: the average worker couldn't afford regular trips, and therefore, insurance.

 

Development in the 20th century

 

The early 20th century brought two new modes of transportation–the automobile and the airplane. In 1897, Travelers Insurance issued the world's first auto insurance policy, and in the 1910s, the first aviation policies appeared (though at that time, pilots were rather insured than passengers).

 

The interwar period and especially the 1920–1930s, was the time of mass tourism. Thomas Cook and other operators began selling the first package tours, and policies included trip cancellation coverage. After World War II, with the advent of jet aviation and rising prosperity in Europe and the United States, tourism has become a truly mass phenomenon. In the 1950s and 1960s, insurance companies introduced standard coverage for medical expenses abroad and emergency evacuation–prior to this, Europeans relied on reciprocal agreements between countries, and Americans traveled without medical insurance at all.

 

The 1970s brought new risks: skyjacking incidents, terrorism, the oil crisis and a sharp rise in prices for air tickets. In response, insurers introduced “Cancel For Any Reason” option and tour operator bankruptcy protection. In the 1980s, with the advancement of computerization, a shift toward automated underwriting and policy issuance through travel agencies began.

 

Modern era (21st century)

 

With the internet in the 1990s and especially after 2005, the market changed radically. The first online aggregators (WorldNomads, InsureMyTrip, Squaremouth) made it possible to compare and purchase policies in minutes. By the 2010s, major insurers had launched mobile apps with the instant purchase and electronic policies on the phone.

 

The COVID-19 pandemic has been the most serious test in the industry's history. In 2020, insurers paid out the record amounts for trip cancellations, and then quickly introduced new coverage: hotel quarantine, positive PCR test and, in some cases, even the denial of travel due to "fear of infection." Today, almost all policies include COVID-related risks alongside traditional ones.

 

Current trends include:

 

• Personalization of insurance policies using AI and BigData;
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• Coverage for extreme sports and adventure tourism;
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• Insurance for digital nomads and long-term trips (up to 1–2 years);
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• Eco-friendly and "green" policies that offset the carbon footprint;
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• Protection against cyber risks (e.g., theft of card data or phishing attacks during travel).

 

According to 2024–2025 estimates, the global travel insurance market exceeds $30 billion per year and continues to grow by 12–15% annually. The largest players are Allianz Partners, AXA, AIG, Zurich and the American company Travelers, which has been in business for 160 years.

 

Conclusion

 

Over two and a half thousand years, travel insurance has evolved from verbal agreements between merchants to a high-tech product available in one click. It reflected and continues to represent the major challenges of its time: from pirates and shipwrecks to pandemics and climate cataclysms.

 

In the coming decades the industry will see new transformations: independent travel insurance, protection against space tourism risks, integration with block chain and NFT policies. But the core function remains unchanged – to give people the confidence that even in the most remote corner of the planet, they won't be left alone with trouble. Therefore, when planning your next trip, do not skimp on the policy: history shows that it's one of the most reliable investments in your peace of mind.