Machinery insurance

In Germany, this boom in economic development began, somewhat later, in the second half of the 19th century. Rapid growth and confidence in the ability to realize new business ideas led to a wave of new businesses being set up in what came to be known as the "founder era" ("Gründerzeit").

One of these successful founders was the 36-year-old Karl Thieme, who, in cooperation with respected industrialists and bankers from Munich, founded the Münchener Rückversicherungs-Gesellschaft in Munich in 1880 and Allianz Versicherungs-AG in Berlin in 1890. In 1898, one of his employees, Chief Engineer Fritz Böhrer, who had gathered extensive experience with losses in his time as technical director of a printing company, suggested something that had not been available in Germany up to that time – an innovative "insurance for machines and mechanical devices for all industrial companies, electricity, gas and water works, etc.".

In 1898/99 Böhrer carried out a written survey among various commercial and industrial companies in Bavaria. Following an analysis of this survey, which confirmed the need for machinery insurance, the new product was introduced in conjunction with other participating insurance companies and marketed as "accident insurance" for machinery supplementary to an existing public liability insurance policy.

All risks cover with named exclusions

Thieme, who was always open to new ideas and greatly interested in innovative insurance schemes for his young company and its clients, backed Böhrer’s idea entirely. From the very outset, this machinery insurance was designed as all risks cover with named exclusions – quite the opposite of the policies for steam boilers, which only offered insurance protection for property damage caused by named perils, e.g. explosion.

On 1st January 1900, what was then the Munich Branch of Allianz Versicherungs-AG was granted a licence to sell this machinery insurance – initially for the Kingdom of Bavaria. The Imperial Supervisory Office in Berlin later extended this licence to several primary insurers all over Germany in 1903 and 1904.

With this product, the then still young Munich Re wanted to offer its cedants an insurance cover designed to meet the needs of the flourishing commercial and industrial business. With the help of specially selected agents, business with the new product was rapidly expanded and offered for machinery in virtually every sector. More and more insurers became active in the new class.

Global ventures

Munich Re also marketed machinery insurance outside Germany – in Austria, Hungary, Italy, Switzerland, Norway, Denmark, the Netherlands and, ultimately, also overseas. Thieme continued to support Böhrer’s idea of machinery insurance through various difficulties of the pioneering years. In this way, the fortuitous meeting of Thieme, the courageous entrepreneur, and Böhrer, the visionary engineer, helped machinery insurance become a success.

To put the new class of insurance on a broader footing, insurance for financial losses resulting from insured machinery losses – known at that time as operating loss insurance – was introduced on 15th August 1910 as an early forerunner of machinery loss of profits insurance.

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