Marine cargo insurance is as old as marine trade and has
existed in various forms dating back to 3000 BC. Early
merchants trading on China's rivers practiced a form of
loss control by deliberately spreading a given cargo
among several vessels, thereby reducing the potential
History of Marine
It is in the ancient civilization of Babylon, however,
that we find the earliest record of insurance in the
form of "bottomry." The Code of Hammurabi (c. 2100 BC)
sets bottomry (the advance of money on the security of a
vessel to protect against the loss of the cargo by
marine perils) at 20 percent. Traders, whose cargoes
were advanced by merchants, were thus protected from
debt in the event that the cargo was lost. This practice
continued throughout the Mediterranean region and was
further emphasized in an edict by the Roman Emperor
Justinian, who restricted the interest money advanced to
bottomry to 12 percent.
Another marine insurance term found in ancient time is
General Average. The Greek Indian and Phoenician traders
are known to have used the concept, and a written
reference to it is made in Rhodian Law (c. 700 BC). The
law states, "Let that which has been jettisoned on
behalf of all be restored by the contribution of all."
It continues, "A collection of the contributions for
jettison shall be made when the ship is saved."
Justinian also codifies the concept of General Average,
taking it a step further to include the following: "When
a ship is sunk or wrecked, whatever of his property each
owner may have saved, he shall keep it for himself."
This concept was widely used throughout early
The next major development in marine insurance can be
traced to the rise of the guilds throughout Europe in
the 11th and 12th centuries. Danish navigators began
forming guilds whose role was to indemnify its members
against losses at sea.
The same era also finds the first use of premiums in
marine insurance. The merchant cities of Lombardy,
Venice and Florence were the centers of Mediterranean
trade and it was here that written records began to
emerge. By 1255, the Merchant State of Venice had
embodied the principals of mutual insurance against the
loss of pillage through contribution.
The oldest marine policy known to have been issued was
on a vessel named Santa Clara, and the oldest policy
document in existence was dated April 24, 1384, covering
four bales of textiles on a journey from Pisa to Savona.
The Lombards brought these basic concepts of marine
insurance to northern Europe and England in the 13th
Century. By the 17th Century, London, with the emergence
of the Lloyd's of London Association, had developed into
a leading center for marine insurance.
The well-known Lloyd's of London traces its roots to a
coffee shop founded by Samuel Lloyd in 1688 and was
favored as a meeting place for the transaction of
insurance business among underwriters and merchants. By
1734, the official list of vessels and values known as
the "Lloyd's List" was first published. More than 250
years later, it continues to serve as the leading
shipping list in the marine insurance industry. In 1769,
underwriters took their informal arrangement and founded
the organization we know today as Lloyd's of London. Ten
years later, the first standard policy wording was
developed for use at Lloyd's.
Today, Lloyd's of London is still acknowledged as the
largest meeting place for underwriters and shippers to
transact marine insurance business. In 1906, the British
Parliament enacted the Marine Insurance Act. This
legislation continues to influence marine insurance
policy wordings and conditions to this day.