The History of Marine Insurance

The development of insurance contracts began to take shape in ancient Roman times as they tried to establish some order to trading methods. Genoa and other Italian city States instituted a system of separate insurance for maritime trade during the fourteenth century with this spreading to cities in Northern Europe. Primarily, costing of the policies was estimated on whether or not sea routes were safe or considered high risk of capture by pirates.

Marine insurance in English court law became established in 1601 with a chamber of assurance that separated it from other law. During the middle of the eighteenth century, the merging of merchant law and common law principles came about and saw the founding of Lloyds of London. Other marine insurers began and so an infrastructure consisting of shipbrokers and admiralty lawyers in combination with bankers gave birth to the maritime insurance as known today.

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During the nineteenth century, standard clauses were developed by Lloyds and other London underwriters, known as the Institute Clauses, which are still used by marine insurers today.

The History of Marine Insurance

From this ancient insurance, there developed non-marine insurance and reinsurance. However, in modern times, this is usually on offer together with Aviation and cargo risk (transit) insurance, known as ‘MAT,’ which a later standard policy on the London Market in 1991, changed to the ‘MAR 91 form’, a form of general insurance statement.

A typical marine insurance policy covers three-quarters of the insurer’s liability to third parties. During the nineteenth century, ship owners formed underwriting clubs called Protection and Indemnity Clubs or P&I, for the remaining quarter of liability. These clubs still exist and non-commercial marine and non-marine mutuals are modelled on them, regarding oil polluting and other risks, such as nuclear fallouts.

Then there is ‘total losses and ‘constructive total loss’. When the damages to or cost of a repair equals or exceeds the value of the property, this is an actual loss, whereas a constructive total loss is the cost of the repair and the cost of salvage equal or exceeding the value. These two terms are applicable when there are assets left to pay for damages. Unfortunately, this is not always the case as ships sometimes get lost at sea or total theft occurs.

This is how marine insurance differs from non-marine insurance with the insured party having to prove the loss. By tradition, marine insurance notes that the insurers have an interest in the ship and cargo, rather than in only the ships survival.

Boat Quote provide cover from recognised UK marine insurers

The History of Marine Insurance

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