<P> The first methods of transferring or distributing risk in a monetary economy, were practised by Chinese and Babylonian traders in the 3rd and 2nd millennia BC, respectively . Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing . The Babylonians developed a system that was recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Mediterranean sailing merchants . If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea . </P> <P> Achaemenian monarchs in Ancient Persia were presented with annual gifts from the various ethnic groups under their control . This would function as an early form of political insurance, and officially bound the Persian monarch to protect the group from harm . </P> <P> At some point in the 1st millennium BC, the inhabitants of Rhodes created the' general average' . This allowed groups of merchants to pay to insure their goods being shipped together . The collected premiums would be used to reimburse any merchant whose goods were jettisoned during transport, whether due to storm or sinkage . </P> <P> The ancient Athenian "maritime loan" advanced money for voyages with repayment being cancelled if the ship was lost . In the 4th century BC, rates for the loans differed according to safe or dangerous times of year, implying an intuitive pricing of risk with an effect similar to insurance . </P>

Where did the idea of insurance come from