The History of Worker’s Compensation Insurance

Written By Charlotte Insurance on May 1, 2018. It has 0 comments.

You might think that workers’ compensation insurance is a 20th century invention, but you’d be wrong. While workers’ comp as we know it in the United States only dates back to the early 1900s, the idea of compensating injured workers is an old practice.


As far back as 2050 BC (yes, that’s nearly 4,000 years ago), ancient Sumerians had a system in place for compensating their injured workers. Without the safety advancements, tools, and technology of today even basic work could be extremely dangerous. As a result, this ancient society created schedules of compensation based on the type and size of the injury received. Both lost body parts and fractures were included.

  • The loss of one thumb joint was equal to the value of half a finger.
  • The value of a lost ear was based on the surface area of the ear — using the remaining ear for comparison, one assumes.

While the model may seem slightly familiar to us today, it didn’t exactly translate to European cultures.


During the Middle Ages and the Renaissance period in Europe, compensation took a different and much less generous turn. Three rules were applied to workers’ injuries that made receiving compensation almost impossible:

  • Contributory negligence meant that if the worker was in any way responsible for the accident (slips, trips, and mistakes), no compensation was due.
  • The fellow servant rule said that if a fellow employee/worker caused the accident, the injured worker received nothing.
  • Assumption of risk meant that as long as the worker was told the inherent risks when they took the job, they assumed all risk by agreeing to do the work and therefore, no compensation was due.

If it sounds harsh and unfair, that’s because it was. A worker’s only recourse was the court system but it required a lot of money to bring a suit against an employer. Even when an injured employee managed it, they rarely won.


These draconian rules spread across Europe and the United States and continued for years into the Industrial Revolution. It wasn’t until Prussian Chancellor Otto von Bismarck came to power in the mid to late 19th century that the workers’ compensation rules as we know them began to form. The changes were made as part of what is known as the Realpolitik movement that was based on more pragmatic governance.

  • 1871: Limited protections were provided to workers in certain factories, mines, quarries, and railroads
  • 1884: Chancellor Bismarck created Workers’ Accident Insurance

A safety net was created to help workers who were no longer able to work due to disability. Most of the money available was granted to workers with job-related injuries, including payment for the medical care and any rehabilitation to help them recover. In a nod to employers, receiving this compensation meant that the worker could not sue their employer.

Sound familiar? That’s because the Prussian model continues to be the basis for workers’ compensation insurance as we know it around the world.


Today, we’re all very familiar with the protections afforded workers — and employers — through workers’ comp insurance. While it can be a large business expense, it pays for itself in a single bad accident. But our current form of workers’ compensation took years to implement in the United States.

While Prussia and Germany began their reforms in 1884, the United Kingdom didn’t create their own system until 1893, and the United States took even longer. The first workers’ compensation law was passed in Wisconsin in 1911 and the last state to add the law was Mississippi in 1948. But it might never have happened without Upton Sinclair’s 1906 novel The Jungle which detailed the horrific working conditions in Chicago slaughterhouses.

Today, while states have different rules of implementation and different departments that oversee workers’ compensation, coverage helps workers across the country. While the most obvious benefits are made to injured or ill workers, businesses benefit too. Workers’ comp takes care of your employee’s needs and makes sure you don’t get sued.

It’s possible to pay too much for workers’ comp or to not have enough to properly protect your employees or your business. To make sure your coverage is the right fit for your business, contact Charlotte Insurance today.

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