sea laws are probably the Rôles d ’ Oléron ( or Jugemens de la mer [ Judgments of the Sea ]), which are named after a small island off the coast of the medieval duchy of Aquitaine .” They are also known as The Rolls or Rules of Oleron .
“ They were drawn up in French in or shortly before 1286 and contain regulations for the wine trade from Brittany and Normandy to England , Scotland and Flanders ,” Frankot wrote . “ The two oldest extant manuscripts containing the Rôles , both from the early 14th century , are of English origin . A mention of the laws in a report written in the 12th year of Edward III ’ s reign ( 1329 ) confirms that the laws were in use in England in the first half of the 14th century . In France , the Rôles d ’ Oléron had been adopted as the official sea law by 1364 .”
There is evidence of insurance-like risktransfer agreements from Amsterdam in 1598 , Antwerp in 1555 and Barcelona in 1484 . And indeed , Marine Insurance : Origins and Institutions , 1300 – 1850 ( Adrian Leonard ed . 2016 ) cites a 1601 quote from Sir Francis Bacon ( 1561 – 1626 ) that marine insurance had existed from “ time out of mind .”
While it is happenstance that centuriesold ephemera such as stock certificates or contracts have survived to provide original source material today , court records are meticulously kept . According to Robert Merkin , et al . in Marine Insurance Legislation ( 5th ed . 2014 ), “ There are reports of marine insurance cases coming before the English courts in the 16th and 17th centuries , and it is clear from the early cases that the courts were prepared to enforce marine policies according to their terms .”
The early concepts in marine insurance developed first by practice , then contract , inevitably litigation and finally legislation . They stress the difference between human causes and natural causes (“ acts of man ” or “ acts of God ”). Even that , which might seem to be a bright-line difference , got quickly murky . A storm is obviously an act of nature , but failure to steer away from a storm , or to secure the vessel against wind and waves , are just as obviously human failings .
It should also be noted that merchants and mariners are among the least likely business persons to resolve matters by
The insurance “ ticket ” signing off on the loss of the Titanic .
litigation and legislation . Intervention by civil and criminal authorities leads to regulation and taxation , both of which limit profitability . The distaste was mutual , that is courts and governments felt the limitations of their jurisdiction and of their expertise in nautical matters and early global trade .
At first all that was at stake was the capital invested , or sunk , if that became literally true . Shipowners could also take out liens or mortgages on their vessels , called bottomry bonds . Like an equity loan on terrestrial property , the asset could be seized for non-payment . But if the asset were lost , both the owner and the lender were out .
Insurance represented a different approach : contingent capital . It was pledged by underwriters , but not at risk , and could theoretically be extended indefinitely . Underwriters were literally those who signed their names at the bottom of the policy . The synonym at the time was subscribers . They in turn could lay off part of their risk to others to the point where any one loss , or even a group of losses , could be borne by the wider pools of contingent capital .
Interestingly , marine insurance in Europe developed as a way to protect capital , but around the coasts of what are today India and Pakistan at roughly the same time , it developed as a way to replace capital . Lands bordering the Indian Ocean long had a maritime trading system every bit as extensive as that around the Mediterranean or northern Europe . There was , however , significantly less capital . The loss of a vessel could be ruinous to a fisherman or trader .
Early on British merchants and mariners struck a balance between private and public interests : the club . Groups of traders , ship owners , brokers and investors would pool their resources . The key factor is that all members of the club were known to each other and usually pledged to do business only within the club . In insurance , the similar form is the mutual in which pooled contingent capital is pledged .
“ A succession of wars against France from the end of the 16th century had grave effects for both merchant and war vessels ,” wrote Merkin . That “ also led to the wave of financial speculation ultimately stamped out by the Bubble Act of 1720 , [ which ] resulted in a prohibition on the carrying of marine insurance by companies other than the two chartered [ ones ], The Royal Exchange and London Assurance .”
In February 1688 , Edward Lloyd ’ s coffee house in Tower Street was referred to for the very first time in the London Gazette , according to the official company history , corroborated by historical references . The article declared a reward for five stolen
Willis Towers Watson www . MoAF . org | Winter 2018 | FINANCIAL HISTORY 29