26th Jun 2012
§ I42:1. History of insurance
The contract of insurance had its origin in maritime law. Insurance was unknown to the common law. [New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. 1, 31, 20 L. Ed. 90, 1870 WL 12885 (1870)] In A.D. 1601, the statute of 43 Elizabeth was passed creating a special court for hearing and determining causes arising on policies of insurance. [New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. 1, 31, 20 L. Ed. 90, 1870 WL 12885 (1870) The common law adopted the maritime rules of insurance under the influence of Lord Mansfield. The common law courts at Westminster Hall began at this time to furnish satisfactory relief to claimants. [New England Mut., 78 U.S. at 32]
European history traces the earliest form of the contract of insurance back to the 10th century, if not earlier. In Portugal in the 14th century, regulation made every ship owner and merchant in Lisbon bound to contribute 2% of the profits of each voyage to a common fund from which to pay losses whenever they should occur. [New England Mut.,78 U.S. at 33]
Origin of the premium
The next step in the system, under general European law, was that of insurance based upon premium. Capitalists familiar with the risks of navigation, were found willing to guarantee against them for a small consideration or premium paid. This, the final form of the contract, was in use as early as the beginning of the 14th Century, and the tradition is, that it was introduced into England in that century by the Lombard merchants who settled in London and brought with them the maritime usages of Venice and other Italian cities. [New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. 1, 33, 20 L. Ed. 90, 1870 WL 12885 (1870)]
In times of William the Third and Queen Anne  when coffee-houses in London were the fashionable places of resort, Lloyd’s Coffee House, at the corner of Abchurch Lane, Lombard Street, became the resort of seafaring men, and those that did business with them. There, the underwriters of London congregated, having formed at this center an association among themselves, and with it a system of agency radiating everywhere. [Jones v. Hollywood Style Shop, 62 S.W.2d 167 (Tex. Civ. App. 1933)] Lloyd’s underwriters met in subscription rooms. The business of the subscribers to these rooms were managed by a committee, chosen from their own number, called Lloyd’s Committee, and presided over by a chairman. Agents (generally called Lloyd’s agents) were appointed by a committee in all the principal ports of the world, whose business it was to forward accounts of all departures from and arrival at their ports, as well as of losses and other casualties. [Jones v. Hollywood Style Shop, 62 S.W.2d 167 (Tex. Civ. App. 1933)] See § L52 LLOYD’S.
For additional discussion of history, see § A 4 A C C I D E N T ; § O 5 OCCURRENCE/ACCIDENT; § R51 REPLACEMENT COST COVERAGE; § O39 OTHER INSURANCE; § J1 JEWELER’S BUSINESS POLICY; § S74 STANDARD FORM.