A record of policies issued in Pollard’ s office during 1743 – 1745 shows that he did a substantial business. The risk of seizure by Spanish privateers in the Atlantic and Caribbean was reflected in premiums of 6-10 % on voyages to or from the West Indies in February-March 1743 – 1744, already much higher than the typical peacetime rates of 2 – 3 %. France’ s entry into the war in spring 1744 greatly magnified the risks, causing premiums to spike to 12 – 14 % by July and to 14 – 16 % by September. Some vessels paid even more. Boston newspapers carried frequent reports of engagements at sea and on land, rumors of French privateering activity and reports of vessels captured by both sides.
The organization of the insurance business in early American brokerages closely mirrored that used in Britain, which in turn was derived from customs and practices originating in medieval Italy. A merchant wishing to insure a vessel or cargo engaged a broker, specifying the details of the risk: the name of the vessel and captain, the intended route, the sum to be insured and other pertinent details such as the vessel’ s armament, the size of her crew and when she was expected to sail( or had already sailed). The broker, in turn, consulted with his underwriters, negotiated the conditions and informed the merchant of the quoted premium. If the parties agreed, the policy was opened and the underwriters subscribed their names, together with the amounts they chose to cover, on the policy. The broker recorded the policy and handled payments, maintaining accounts with regular underwriters to whom they offered their risks and receiving commissions from both the underwriters and the insured. A typical policy is shown here: £ 400 insured in November 1761 from Hispaniola to Boston or Newport on the schooner Happy Return, at a premium of 25 %, insured by seven underwriters. Annotations indicate that the policy covered capture by either the English or French, and that the vessel was“ taken.”
Because of the many factors that affected risks, underwriters needed accurate information and the expertise to evaluate the sailing qualities of the vessel, her intended route, her armament, the nature of her cargo, the season and the character and skill of her captain and crew, not to mention the possibility of fraud( such as deliberately sinking an insured ship). In this context, brokers played a key role in conveying information
Boston Athenaeum
Early marine insurance policy from the Ezekiel Price papers.
and payments between the contracting parties, resolving disputes and helping them build the trust necessary to transact.
The French and Indian War( 1754 – 1763) once again exposed American merchant vessels and cargoes to the danger of capture by enemy warships and privateers. As in previous wars, premiums rose substantially, and the risks fluctuated as reports of losses and rumors of military, naval or political developments shifted perceptions of the risks to maritime commerce. The war brought new, highly profitable, but risky trading( and smuggling) opportunities for merchants. But, as before, it also disrupted communications with
Britain, and therefore access to the British insurance market, further increasing merchants’ propensity to insure locally.
Stimulated by these developments, several new brokerages opened, including that of Ezekiel Price of Boston, who in 1759 began brokering policies as a sideline to his business as a notary public. Price’ s brokerage remained active throughout a remarkably turbulent period for Boston merchants, from his opening at the height of the French and Indian War, through the events leading to the American Revolution and the Revolution itself.
Most of the voyages insured in Price’ s brokerage originated or terminated( or
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