Insurance Terms

Before government-run social insurance programs were enacted, private groups had developed the concept of shared risk. In ancient Greece and Rome there were burial societies to which people contributed regularly to ensure that upon their deaths they would be buried with dignity. Some Medieval guilds had programs under which members contributed to funds which were drawn upon when members were no longer able to work, or died. In more recent times, some fraternal organizations and labor unions had similar programs.

The first state-run social insurance program paying retirement benefits was implemented in Germany in 1889 by Chancellor Otto von Bismarck. Bismarck sought to hold back the historical wave that was building in support of socialism across Europe at the time. His system was funded with payroll taxes paid by the employee and the employer, along with contributions from the government. It also included a disability benefit. Today such programs are common, though not universal, among developed countries. They often include features of the initial German system.

In the United Kingdom the first contributory pension scheme was enacted in 1911, enthusiastically supported by Winston Churchill who described the social insurance principle as "bringing the miracle of averages to the rescue of the millions". Subsequently, the Beveridge Report of 1942 offered the main alternative model. Beveridge attempted to make insurance the basis for a comprehensive, universal scheme covering all the main social needs. President Franklin Roosevelt described the ideal social insurance system as one which provided economic protection "from the cradle to the grave."

Social security is seen as providing assistance to retired workers, often in the form of a superannuation system that provides a pension from a fund to which workers and their employers (and in most countries the government) have contributed throughout their working lives. Workers may also contribute to some form of insurance scheme that provides income and assistance in the event of injury or illness for them and their families. While the scheme may be compulsory, the contributions or historic income often determine the level of support provided, once basic eligibility criteria such as age or inability to work are established. In most of the developed "first world" countries, social security also includes a system of universal health care.

Government pension expenses

• As a % of GDP during 2000 ([1]) ([2])
• Italy 14%
• France 12%
• Germany 12%
• Sweden 9%
• Japan 8%
• USA 4%
• South Korea 2%
• Hong Kong 2%