Marine Insurance

AuthorEdgar Gold; Aldo Chircop; Hugh M. Kindred; William Moreira
Marine insurance, the earliest form of risk coverage, is a very ancient
subject matter in maritime law. Knowing the provenance and history of
marine insurance is essential to understanding how it operates in the
modern era.1
1) O r igi n s
The origins of marine insurance are “veiled in antiquity and lost in obscur-
ity.”2 The formal concept of marine insurance as protection against loss
by maritime perils has existed since at least 215 BC, when the Roman
government was required by the suppliers of military stores to accept
“all risk of loss, arising from the attacks of enemies or from storms, to
the supplies which they placed in the ships.”3 By 50 BC, certain essential
elements of modern marine insurance were already present, including
(1) the requirement of an insurable interest, (2) the assumption of the
1 For a detailed examination of the history of marine insurance see Victor Dover,
A Handbook to Marine Insurance, 8th ed (London: Witherby, 1975) ch 1; Donald
O’May & Julian Hill, Marine Insurance: Law and Policy (London: Sweet & Max-
well, 1993) ch 1.
2 Triglav v Terrasses Jewellers Inc, [1983] 1 SCR 283. See also Graydon S Staring &
George L Waddell, “Marine Insurance” (1999) 73 Tulane Law Review 1619.
3 Dover, above note 1 at 2.
risk by someone other than the owner of the property, and (3) the pay-
ment of a premium as a consideration for the indemnities offered.
2) Lombard and Hanseatic Initiatives
The further development of marine insurance remains obscure until
the thirteenth century. Marine insurance as it is practised today can
be traced to Italy at that time. It was associated with the merchants
of Lombard, particularly Florence in about 1250 AD. Lombard mer-
chants wrote the oldest existing insurance policy, dated 23 October
1347, which insured the ship Santa Clara on a voyage from Genoa to
Majorca. The Lombards also migrated to other countries, and by the
fourteenth century were writing marine insurance in England, Belgium,
and France, as well as in Italy.
Contemporaneously with the Lombards, the merchants of the
“Hansa” towns in northern Germany were also writing marine insurance.
In the thirteenth century, these towns formed the Hanseatic League,
which would control world shipping until the sixteenth century. Some
of the Hansa merchants migrated to England and would eventual-
ly monopolize English overseas trade, while the Lombards controlled
banking in England. However, the antipathy of English merchants to
the Lombard and Hansa monopoly led to their expulsion from England
in 1483 and 1597 respectively. Some English merchants at this time
had been participating in marine insurance but their success was not as
great as the Lombards and the Hanseatic League.
3) The Establishment of the English Marine Insurance
With the expulsion of the foreign merchants, the British dominance of
marine insurance was assured. The f‌irst English statute relating to mar-
ine insurance was An Act Touching Policies of Assurances Used Amongst
Merchants,4 drafted in 1601 by Sir Francis Bacon and based on the insur-
ance practices of the Hanseatic League. The Preamble to the 1601 stat-
ute not only describes the basic principles of marine insurance as still
practised today, but also illustrates how f‌irmly these principles were
established in the early seventeenth century:
And whereas it has been time out of minde an usage amongst merchan-
tes, both of these realms and of foreign nations when they make any
great adventure (specially into remote parts) to give some consider-
4 1601 (UK), 43 Eliz, c 12.
Marine Insurance 395
ation of money to other persons (which commonly are in no small
number) to have from them assurance made of the goods, merchan-
dises, ships and things adventured or some part thereof, at such rates
and in such sort as the parties assurers and parties assured can agree,
which course of dealing is commonly termed a policy of assurance;
by means of which policy of assurance it cometh to pass that upon
the loss or perishing of any ship there followeth not the undoing of
any man, but the loss lighteth rather easily upon many than heavily
upon few, and rather upon them that adventure not than those that
do adventure, whereby all merchantes, especially the younger sort are
allured to venture more willingly and more freely.
The “marketplace” for marine insurance was the forecourt of the Royal
Exchange, a general commodities market, until the rise of Lloyd’s Cof-
fee House in the seventeenth century.
4) Lloyd’s
The early London coffee houses were not only centres of literary interest
and debate, but also of commerce. They had signif‌icant political inf‌lu-
ence, to the extent that King Charles II tried unsuccessfully to suppress
them. Among the many seventeenth century London coffee houses was
one owned by Edward Lloyd, situated on Tower Street near the Thames.
“Lloyd’s Coffee House” attracted the patronage of those interested in
and connected with the sea. Lloyd’s became a convenient and congenial
place for merchants of common interest to meet, carry out commercial
transactions, and arrange marine insurance.
No insurance companies existed at that time. Only individuals prac-
tised marine insurance, and became known as “underwriters” as they
wrote their names and signatures beneath the wording on insurance poli-
cies in order to provide a personal guarantee for a commercial venture.
Edward Lloyd encouraged these transactions by providing his custom-
ers with pen, ink, and paper along with shipping information obtained
from the waterfront by runners. In 1696, he published a newssheet called
Lloyd’s News, but this was discontinued after he found himself in diff‌i-
culties for inaccurately publishing proceedings of the House of Lords.
Short-lived as it was, Lloyd’s News can be seen as the forerunner of Lloyd’s
List, London’s oldest daily newspaper, f‌irst published in 1734, twenty-one
years after Lloyd’s death.
In 1769, Lloyd’s reputation as a meeting place for merchant insurers
was threatened by gambling among the customers. As a result, the ser-
ious insurance element set up an alternate establishment called “New
Lloyd’s.” Two years later in 1771, space problems in the new coffee

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