History of Marine Insurance

Marine insurance is probably as old as the activity of international trade, and there are various claimants to the title of inventor. In England, there is much evidence of widespread activity at least from the sixteenth century onwards, with business being arranged as between individuals. There are reports of marine insurance cases coming before the English courts in the sixteenth and seventeenth centuries, and it is clear from the early cases that the courts were prepared to enforce marine policies according to their terms. Such insurance was often in mutual form, whereby a group of shipowners would come together and pay sums into a fund, that fund being used to meet losses incurred by any one of them. A succession of wars against France from the end of the sixteenth century, which had grave effects for both merchant and war vessels, and which also led directly to the wave of financial speculation ultimately stamped out by the Bubble Act 1720, resulted in a prohibition on the carrying on of marine insurance business by companies other than by the two chartered companies, the Royal Exchange and London Assurance. Those events saw the conversion of Edward Lloyd’s Coffee House, which had been in existence since the 1790s as a meeting place for merchants, into the unofficial centre for the writing of marine business, the first policy being written in 1721, eight years after Lloyd himself had died. The chartered companies wrote comparatively little marine business, so that by the time of the repeal of the Bubble Act in 1824 Lloyd’s – by this time in new premises – had established a de facto monopoly over the marine insurance market. The Lloyd’s SG (widely thought to mean Ship and Goods) Policy, officially adopted in 1779, had existed in much the same form for at least 50 years beforehand, and remained the governing document for the placement of marine insurance until 1982.