Financial History Issue 124 (Winter 2018) | Page 30
FROM TIME OUT OF MIND
A Brief History of Marine Insurance
If any ship, or other vessel, by any casualty or misfortune happens to be wrecked
and perish, in that case, the pieces of the hulk of the vessel, as well as the lading thereof,
ought to be reserved and kept in safety for them to whom it belonged before such
disaster happened, notwithstanding any custom to the contrary.
— The Rules of Oléron (c. 1266) Article XLVI, according to the Admiralty and Maritime Law Guide
By Gregory DL Morris
Financial history has most often been
taken to be the history of money, bank-
ing and lending, and stock markets. Fair
enough, but insurance deserves equal bill-
ing. It is a widely-held belief by insur-
ance professionals and researchers that
marine insurance — hull and cargo spe-
cifically — are the oldest forms of insur-
ance. Some date early forms of those to
Phoenician traders whose heyday of trad-
ing colonies around the Mediterranean
began around 1200 bc. The French port
of Marseilles was among the farthest west,
founded around 600 bc.
Trade over those distances, with voy-
ages lasting weeks and months, clearly
involved risks greater than local trade,
terrestrial or maritime. The history of
business has been driven by the need to
concentrate capital. That also means a
concentration of risk. The history of insur-
ance has been driven by the concurrent
need to transfer and diffuse those concen-
trated risks.
A prize document in financial history
has long been the oldest-known share
certificate, representing stock in the Dutch
East India Company, dated 1606. But
marine insurance has that beat by two and
a half centuries.
“The first formal marine insurance pol-
icy that we would recognize today as such
was from 1350,” said Rod Johnson, direc-
tor of marine risk management at RSA
Global Risk, a major UK underwriter. He
also sits on the loss-prevention commit-
tee of the International Union of Marine
Insurers.
“Marine insurance is based on agreed
levels of uncertainty,” Johnson explained.
28 FINANCIAL HISTORY | Winter 2018 | www.MoAF.org
“The owner of the vessel and the shippers
of the cargo know where the vessel is sup-
posed to go, but they don’t know exactly
where it is or what it is doing at any
moment. Neither do the insurers.”
Those earliest formal policies built on
the earliest attempt at international mari-
time law. According to Medieval Maritime
Law from Oléron to Wisby: Jurisdictions
in the Law of the Sea, by Edda Frankot
(University of Groningen/University of
Aberdeen), “the most famous medieval
Costa Concordia, owned by the world’s largest
cruise line, Carnival, hit rocks close to the island
of Giglio off Tuscany in January 2012, killing
32 people. The captain, who fled the sinking
ship, was convicted of manslaughter. The
salvage — righting, removing and scrapping
the ship; as well as paying damages and
environmental restoration — cost $2 billion
and took more than two years.