Insurance, that excellent establishment by which losses that would entirely ruin a merchant, being divided among a company, are rendered supportable, and almost imperceptible; by which undertakings too great for one person are easily accomplished, and by which commodities brought from the most distant regions are made cheaper684, appears not to have been known to the Romans, however near they may have come to the invention of it. If we examine closely the information from which some endeavour to prove the contrary, it will be found that it is far from sufficient to support their opinion.

Puffendorf685, Barbeyrac686, Loccenius687, Kulpis688, and others, ground their assertions on a passage of Livy689, who says, that when the Roman army in Spain was distressed for provisions, clothing and other necessaries, a company engaged to convey to them everything they stood in need of, under the stipulation that the State should make good their loss, in case their vessels should be shipwrecked by storms, or be taken by the enemy; and we are told that these terms were agreed to. This was undoubtedly a promise of indemnification, but by no means an insurance, in which it is always necessary that a premium should be given. On occasions of this kind, however, acts of fraud were practised, like those committed at present, to the prejudice of insurers. Shipwrecks were pretended to have happened which never took place; and old shattered vessels, freighted with articles of little value, were purposely sunk, and the crew saved in boats; and large sums were then demanded as a reimbursement for the loss690.

Little more is proved by a passage of Suetonius691, which Kulpis and others consider as affording an instance of insurance. That author tells us, that the emperor Claudius promised to indemnify merchants for their losses, if their ships should perish by storms at sea. This passage Anderson must not have read; else he would not have said that Suetonius ascribed the invention of insurance to Claudius.

In Simon’s edition of Grotius, a passage is quoted from Cicero’s epistles692 as an instance of insurance among the Romans, which seems to be more probable. Cicero says he hopes to find at Laodicea security, by means of which he can remit the money of the republic, without being exposed to any danger on its passage. The word prÆdes may here signify insurers; but, in my opinion, this quotation ought rather to be classed among those which have been collected by Ayrer, as the first traces of bills of exchange693.

Those remains of the ancient laws which, according to Kulpis and others, allude to insurance, concern bottomry (foenus nauticum) only; and that this is much older than insurance has been already fully proved by Stypman694.

Malynes695, Anderson, and others affirm, that insurance is mentioned in the marine laws of the Isle of Oleron. This island, which lies opposite to the mouth of the Charente, on the coast of France, was much celebrated in the eleventh, twelfth, and following centuries on account of its trade. It belonged then to the duke of Aquitaine, and came to the crown of England by the marriage of Eleonora, daughter of the last duke, with Henry II. Under Eleonora were framed in the island those laws so well-known by the names Roole d’Oleron, Roole des Jugemens d’Oleron, that, like the laws of the Rhodians, they were used also by foreigners. These laws were afterwards enlarged and improved by Richard I., Eleonora’s son; at least we are assured so by the French historians: but the English ascribe them to Richard alone. In order to determine the period when they were framed, I shall only observe that Eleonora died in the year 1202, and Richard in 1199; and Anderson, therefore, not without probability, places the origin of them in the year 1194. A copy of these laws, printed at Rouen, is still preserved, in which it is said that they were first drawn up in 1266. This, however, the French and the English declare to be false696. They are written in French, that is, in the old Gascon dialect. I am acquainted with them from the following scarce book, the author of which, in the preface, calls himself Cleirac: Us et Coutumes de la Mer697; but I find no traces in them of insurance. Even Cleirac himself, who has given an excellent explanation of the laws of Oleron, seems not to have found any; for where he relates everything he knew respecting the history of it, he ascribes this invention, and also that of bills of exchange, to the Jews, who made use of it when they were expelled from France. According to Cleirac, insurance was long detested by the Christians, who at that time considered it as a sin to take interest; and the use of it, as well as of bills of exchange, was first made common by the Guelphs and Ghibelines. Of this pretended service of the Jews in regard to insurance, I know no proof.

The celebrated maritime laws of the city of Wisby, in the island of Gothland, whether of later date, as the French assert, or older, which is more probable, than those of Oleron, are equally silent with respect to insurance. These laws were not written originally in Swedish, as l’Estocq698 says, but in the Low-German. The translation into High-German by Marquard699 is incorrect, and the French one of Cleirac is too free and too much abridged. The Dutch translation published at Amsterdam is the completest700.

Insurance was, undoubtedly, not known at the time when the later Hanseatic maritime laws were framed, else it would have been mentioned in them. Of these laws there are various editions. One of those most used is that by Kericke, which is inserted also in Heineccii Scriptorum de Jure Nautico et Maritimo Fasciculus. Cleirac has given a French translation of them.

As little respecting insurance is to be found in Il Consolato del Mare. These maritime laws, highly worthy of notice, were originally written in the Catalonian dialect; and it seems very probable that they were drawn up at Barcelona. A part of them appears to have been framed in the eleventh, but the greater part in the thirteenth century; for the book itself proves, in more than one place, that they are not all of the same antiquity. The most correct edition is that published at Leyden in 1704701. Those writers who have pretended that insurance is mentioned in these Catalonian maritime laws have, perhaps, been led into this error, because, in an appendix to some of the common editions, there is a short account of insurance as once practised at Barcelona. As I have never seen this small treatise, I do not know whether it contains anything respecting the history of it. The oldest laws and regulations concerning insurance, with which I am at present acquainted, are the following.

On the 28th of January 1523, five persons appointed for that purpose drew up at Florence some articles which are still employed on the exchange at Leghorn. These important regulations, together with the prescribed form of policies, which may be considered as the oldest702, have been inserted, in Italian and German, by Magens, in his Treatise on Insurance, Average and Bottomry703, published at Hamburgh in 1753. I should have been glad to have found in Italian authors some information respecting the antiquity of these regulations704, a copy of which Magens says he procured from Leghorn; but I have hitherto sought for it in vain. Straccha however mentions a Florentine order of June the 15th, 1526, which forbids common insurance, unless the goods and commodities are specified705.

There is still preserved a short regulation of the 25th May 1537, by the emperor Charles V., respecting bills of exchange and insurance, in which the strictly fulfilling only of an agreement of insurance is commanded.

In 1549 the same emperor issued an express order, “Op ’t faict van der zee-vaerdt,” in which occur some articles respecting insurance706, and additions were afterwards made to it in 1561.

In the year 1556, Philip II., king of Spain, gave to the Spanish merchants certain regulations respecting insurance, which are inserted by Magens, with a German translation, in his work before mentioned. They contain some forms of policies on ships going to the Indies.

On the last of October 1563, Philip II. published his maritime laws, in which some forms of policies are given707; but on the last of March 1568 that prince forbade the practice of insurance, on account of the bad use to which it had been often applied. This prohibition I have not been able to find. I am acquainted with it only by an order of the 20th of January 1570, in which the king expressly recals it, because the merchants at Antwerp, both subjects and foreigners, had presented strong remonstrances against it708.

In the year 1598, the Kamer von Assurantie, Chamber of Insurance, was established at Amsterdam. An account of the first regulations of this insurance-office may be seen in Pontanus’s History of the City of Amsterdam, and in other works709.

In the year 1600, regulations respecting insurance were formed by the city of Middelburg in Zealand.

It appears that the first regulations respecting insurances in England, which may be seen in Anderson’s History of Commerce, were made in the year 1601. We find by them that insurers had before that period conducted themselves in such a manner, that the utmost confidence was reposed in their honesty, and that on this account few or no disputes had arisen710.

In the year 1604, regulations were formed respecting insurance at Rotterdam; and in 1610 were drawn up those of Genoa, which Magens has inserted in his work, taken from the Latin statutes of the Republic, together with a German translation.

In 1612 the Insurance Chamber at Amsterdam was established by public authority, and received several privileges.

Malynes asserts, but without either proofs or probability, that the people of Antwerp were first taught insurance by the English; and says that, as the merchants assembled for transacting business in Lombard-street, so called because certain Italians from Lombardy had lombards there, or houses for lending money on pledges, long before the building of the Exchange, it became customary, as it was in his time (1622), to be guided in policies by what was done in Lombard-street, in London.

[M‘Culloch states711 that it is probable insurance was introduced into England some time about the beginning of the sixteenth century, for it is mentioned in the statute 43 Eliz. c. 12, in which its utility is very clearly set forth, that it had been an immemorial usage among merchants, both English and foreign, when they made any great adventure, to procure insurance to be made on the ships or goods adventured. From this it may reasonably be supposed that insurance had been in use in England for at least a century previous. It appears from the same statute, that it had originally been usual to refer all disputes that arose with respect to insurances to the decision of “grave and discreet” merchants appointed by the lord mayor. But abuses having grown out of this practice, the statute authorized the lord chancellor to appoint a commission for the trial of insurance cases; and in the reign of Charles II. the powers of the commissioners were enlarged. But this court soon after fell into disuse; and, what is singular, no trace can now be discovered of any of its proceedings.]

Guicciardini, who wrote his Account of the Netherlands in 1567, remarks, in describing Antwerp, that the merchants there were accustomed to insure their ships. Anderson says that this is the first instance of maritime insurance, which is very astonishing, as he thinks the invention of insurance is to be found in Suetonius, and in the laws of the Isle of Oleron.

A most useful imitation of insurance in trade is the institution of insurance-offices, to indemnify losses sustained by fire. As far as I have been able to learn, companies for that purpose were first formed towards the middle of the last century, though houses were insured by individuals much earlier. The fire-office at Paris was established in 1745; that of the electorate of Hanover in 1750; that of Nassau-Weilburg in 1751; those of Brunswick-Wolfenbuttel and Wirtemberg in 1753; that of Anspach in 1754; that of Baden-Durlach in 1758; that of the county of Mark in 1764; those of Saxe-Weimar and Eisenach in 1768; and that of the Society of the Clergy in the Mark of Brandenburg712, to insure goods and household furniture, was established in 1769.

It is perhaps known to few, that even in the beginning of the seventeenth century, a proposal was made by some ingenious person, that all the proprietors of land should insure the houses of their subjects against fire, on their paying so much per cent. annually, according to the value of them. The author of this scheme presented it to count Anthony Gunther von Oldenburg, in the year 1609, as a means of finance not to be found in any work printed on that subject. The author in his plan said713, that “as many fires happened by which a great number of people lost their property, the count might lay before his subjects the danger of such accidents; and propose to them, that if they would, either singly or united, put a value on their houses, and for every hundred dollars valuation pay to him yearly one dollar; he, on the other hand, would engage, that in case by the will of God their houses should be reduced to ashes, the misfortunes of war excepted, he would take upon himself the loss, and pay to the sufferers as much money as might be sufficient to rebuild them; and that all persons, both natives and foreigners, who might be desirous of sharing in the benefits of this institution, should not be excluded. The author was confident that, though the damage might fall heavy at first, a considerable sum would be gradually raised, from year to year; and that every one might thus insure his houses against accidents. He had no doubt that it would be fully proved, if a calculation were made of the number of houses consumed by fire, within a certain space, in the course of thirty years, that the loss would not amount, by a good deal, to the sum that would be collected in that time. He did not however advise that all the houses in every town should be comprehended, as the money claimed might amount to too much; but only that some and certain houses should be admitted into this association.”

I shall here insert, from the same author, the count’s reflections on this plan, and the conclusion which he formed:—“It is to be considered,” says he, “what sum every proprietor of land may with certainty raise and receive; whether the proposed plan can, to the undoubted benefit of the subjects, and the advantage of their lord, be honourably, justly, and irreproachfully instituted without tempting Providence; without incurring the censure of neighbours; and without disgracing one’s name and dignity; in the next place, that this institution may not have the appearance of a scheme to bring money into the country; and still more that it may have no resemblance to a duty, tax, or impost, but rather to a free contribution, or unconstrained remuneration for being insured from danger, and by which losses being made good, houses can be sooner rebuilt, and put in their former condition.” The count allowed that the object of the plan was good, considered in every point of view, and that a company composed of common individuals might be formed to insure each other’s houses, and pay the losses sustained by fire: but he concluded, that, if he undertook the plan, Providence might be tempted; that his own subjects might be displeased; and that, improper ideas being formed of his conduct, he might be accused unjustly of avarice. “God,” he said, “had without such means preserved and blessed, for many centuries, the ancient house of Oldenburg; and he would still be present with him, through his mercy, and protect his subjects from destructive fires.” He dismissed, therefore, the ingenious author of this plan, but not without rewarding him according to his usual liberality.

[Insurance against fire has been known and carried on in England for nearly a century and a half; at present the number of British Fire Offices amounts to nearly twenty. The premium demanded for insurance varies from 1s. 6d. to 10s. 6d. per £100 according to the supposed risk; the duty is enormous, being no less than 3s. per cent. on the amount insured. This tax yields a considerable addition to the revenue; in 1842 it amounted to £986,420, which corresponds to £563,668,571 value of property insured, leaving out of consideration the value of insured farming stock, the duty on which was repealed in the year 1833. On common risks the duty is no less than 200 per cent. upon the premium! “Such a duty” observes M‘Culloch, “is in the last degree oppressive and impolitic. There cannot, in fact, be the slightest doubt that, were it reduced, as it ought to be, to one-third its present amount, the business of insurance would be very much extended; and as it could not be extended without an increase of security and without lessening the injurious consequences arising from the casualties to which property is exposed, the reduction of the duty would be productive of the best results in a public point of view; while the increase of business would prevent the revenue from being materially diminished.” Several attempts have of late been made in Parliament to induce the government to lower the amount of duty, hitherto without success; it is however to be hoped that some other mode of raising the revenue may be devised than that of taxing so enormously the prudence of the industrious classes714.

In addition to the marine and fire insurance, a somewhat similar speculation has been applied to human life, in the formation of life-insurance companies. These receive small annual payments in consideration of securing to the relations of the assured, or others to whom his property may be bequeathed, a stipulated sum. This arrangement we consider of the highest importance in mercantile countries, particularly to persons engaged in professional or personal occupations, where on the decease of the principal, the agency or appointment is not usually susceptible of transfer or bequest. By means of this species of insurance property is secured to descendants, who, but for some such precaution, might be left destitute. The oldest life-assurance office in London is the Amicable. This company was chartered in 1706, in consequence of application made to her majesty, Queen Anne, by Sir Thomas Allen and others. There are now in London nearly eighty life-assurance companies, of which about sixty are exclusively devoted to that object, and the remainder unite fire-insurance. The terms vary in the different offices, although not considerably, being founded upon recognised sets of tables. A comparative table of the annual rates of premium charged by each British office will be found in Waterston’s CyclopÆdia of Commerce. The premium is of course adapted to the probable duration of life; the lowest being £1 7s. 9d. per £100 on a healthy life at the entrance age of 15, the highest, at the age of 60, being about 7 per cent. A diseased condition in most incapacitates for insurance, but in some offices even diseased lives and risks of every kind are insured, of course at a proportional rate715.

In the reign of Queen Anne several offices were opened for making insurances on marriages, births, christenings, service, &c., and fraudulent practices prevailed to such a degree that by Stat. 9 Ann. c. 6, § 37, a penalty of £500 is imposed on every person setting up such office, and £100 for any person making such assurance in any office already established.

The assurance principle has within the last few years likewise been applied, with the prospect of success, to the guaranteeing of fidelity in persons holding situations of trust. In this case the calculation is, that out of a large range of instances where individuals of good moral character are entrusted with sums belonging to their employers, a nearly regular amount of defalcation will take place annually, or within some other larger space of time. This may give an unpleasant view of human nature, but it is found to be a true one, and the question which arises with men of business is, by what means may the defalcation be best guarded against. The choice is between a guarantee from one or two persons, and from a trading company. By the former plan, the risk is concentrated upon one or two, who may be deeply injured in consequence: by the other plan, the risk is not merely diffused, it is extinguished, for the premiums paid by the insuring parties stand for the losses, besides affording a profit upon the business. Nor have we only thus a protection for private parties against the dangers of security; but individuals, who have the offer of situations on the condition of giving a sufficient guarantee, may now be able to take, where formerly they would have had to decline them, seeing that they might have failed to induce any friend to venture so far in their behalf. Practically, it has also been found that, so far from parties being more ready to give way to temptation when they know that the loss will fall upon a company, they are less so, seeing that the company exercises a more rigid supervision, and presents a sterner front to delinquents, than is the case with private securities in general. Guarantee companies are now established in London, Edinburgh, Glasgow, and other large cities. See Chambers’ Tracts, No. 44.]