SESSION 05. New Approaches to the History of Insurance Law

5. New Approaches to the History of Insurance Law.

Phillip Hellwege (Universität Augsburg)


Modern scholars of insurance law refer to insurance as a legal product. In a contract of sale, for example, the parties exchange goods against money. By contrast, in an insurance transaction the parties exchange money against money: the insurer receives the premiums from the policy holder and in turn promises to pay the insured sum when a certain risk eventuates. The right of the insured to the insured sum is determined in the contract, a legal document, and the boundaries of what the parties can agree upon are set by the law. Against this background, it comes as a surprise that research in the history of insurance has been dominated by economic historians and that within the domain of legal history the history of insurance law has hitherto played only a marginal role. And were research into the history of insurance law exists it is (as traditional research in legal history tends to be) confined to the boundaries of a given jurisdiction. As a consequence, different national narratives have developed. The development of such national narratives is highly problematic. Only recently, legal historians have rediscovered the field of the history of insurance law as a field of study. However, research into the history of insurance law faces a number of challenges. (1) It is an interdisciplinary field of study. Without a firm knowledge of the history of the socio-economic background and without a thorough understanding of insurance markets an analysis of legal questions is impossible. (2) Nevertheless, legal historians have to define their research object independently of other disciplines. Lawyers of all times tend to transpose known solutions to new problems. For the understanding where legal rules in insurance law originated from, legal historians, thus, have to look beyond the sphere of insurance. (3) Finally, insurance practice often has not left any traces in the legal discourse, in legislation or in the case law. And where it has legal historians do not always appreciate that insurance practice may have followed different paths.

The session will have four presentations of 20 minutes each, followed by a discussion. The Organiser invites submissions which challenge, and go beyond, the traditional narratives of insurance legal history without restricting them to any specific field or time frame. Submissions related to, for example, marine insurance, fire insurance, life insurance, guild welfare or state run insurance schemes, to name just some, and covering any legal question will be considered.


Paper 1

Exploring the origins of marine insurance: the insurance function of Roman maritime loan.

Prof. Dr. Nikol Ziha (University Josip Juraj Strossmayer, Osijek, Croatia)

The concept of insurance – primarily as a principle of reciprocity and solidarity – did not emerge as a result of a single historical period, but rather gradually developed in reaction to the hazards which permanently threatened the human existence. Over the course of history, the risks and possible consequences of seafaring led to various types of damage distribution and contractual transfer of risk. An important development stage was the Greco-Roman institute of maritime loan (fenus nauticum, pecunia traiectitia) as a mean of financing and insuring overseas sales in the Mediterranean.

This loan of money constituted a capital that was made available to the merchant for a maritime venture and repayable with very high interest rates on condition that the vessel reached its destination safely. As the interest rate (praemium periculi) in terms of its value and risk adjustment can be compared to a premium and especially as the risk of commercial journey was transferred to the party not directly participating in the maritime venture, maritime loan is attributed a function similar to modern-day marine insurance. Nevertheless, whether this concept was sufficiently developed at that time, that we can speak of it, originally defined by von Jhering, as “the insurance business of the antiquity” (Assekuranzgeschäft des Altertums), is still highly disputed in studies.
By focusing on the contract of maritime loan, which was adapted into the existing architecture of Roman legal system and altered to meet the new developments of commerce, this contribution aims to analyse its insurance function. Using the modern insurance concept as a benchmark, the objective of this paper is to examine the coherence between elements of modern insurance (contractual parties, subject of insurance, premium, risk, covered loss etc.) and its historical precursor, and thus provide a modest contribution to the study of the development of marine insurance in the Mediterranean.


Paper 2

Risks undertaken in marine insurance and its influence on life and fire insurance in England.

Sinem Ogis (Augsburg University)

This study wants to examine the influence of marine insurance on life and fire insurance in England. Scholars during the beginning of the eighteenth century until today have discussed in some parts of their works that life and fire insurance is the offspring of marine insurance, however, without giving explaining the extent of this influence. Early authors referred to the rules on marine insurance when they did not know how to solve unsettled issues in life and fire insurance or perhaps when they thought it is necessary. In conclusion, there is no single work that has ever analyzed the extent of influence of marine insurance on life and fire insurance from legal perspective.

In this conference, my aim is to reveal the understanding and the development of risks during the early modern centuries (from the sixteenth century onwards), which might demonstrate an influence of marine insurance on life and fire insurance under the topic of risks.

Insured perils were always inserted in policies of marine, life and fire insurances from the sixteenth century onwards. Under marine insurance policies, during the sixteenth century, the ship was insured against the risk of fire, and the risk of death of the crew members, captain, passengers, and slaves. Therefore, those risks of life and fire were already known during the early centuries under marine insurance policies and in fact were always covered. Thus, an argumentation during the conference will show whether the insured risks of fire, the life of the mariners and slaves in marine insurance led to the development of fire insurance and life insurance itself. This discussion might at the end reach into a conclusion that the risks insured under marine insurance led to the development of life and fire insurance in England.


Paper 3

From competing corporations towards communal standard contract terms: marine insurance in Antwerp (1815-1860).

Stephanie Annie Plasschaert (Vrije Universiteit Brussel)

In 19th century Belgium and France, competing marine insurance corporations jointly drew up forms containing standard terms that were applied by all companies within one city or port. This happened without the intervention of governments and regulatory agencies, and without the authority of associations of professionals imposing standards. Eventually, these standard contracts of ports could become national policies. This development is unique to marine insurance: of all areas subject to standardization in the nineteenth century, marine insurance is the only one in which standard terms grew through actions undertaken by corporations.

In this project, we will find out what the motives were of corporations adapting their terms and setting up communal policies. The novelty of the project lies in its actor-orientated approach and in its empirical focus on competition as underpinning legal convergence. For the port city Antwerp, twenty-two marine insurance companies and other maritime institutions will be investigated and compared, to determine the influence of the underlying corporate structures on the standardisation of contract terms. During the paper and presentation, we will focus on the results of the research project for Antwerp.


Paper 4

Alabama: The devil fools with the best-laid laws.

Prof. Rob Merkin QC (University of Exeter)

In 1872 an international Arbitral Tribunal awarded the US Government the sum of $15.5 by way of compensation for shipping losses suffered by Northern merchants at the hands of Confederate cruisers in the American Civil War of 1861 to 1865. Those cruisers, notably the Alabama, Florida and Shenandoah, had been constructed in British shipyards and – by design or error – allowed to depart in 1862 and 1863 despite loud and prolonged protests from the US Government. The Tribunal held that Britain had failed to adhere to international law principles of neutrality in not preventing those departures, even though there was substantial doubt as to whether British domestic law in the form of the Foreign Enlistment Act 1819 had thereby been infringed. Ironically, the 1819 Act had largely adopted the provisions of the US Neutrality Act 1794, passed to secure American neutrality in the wars between Britain and France, and US Supreme Court rulings on that legislation in the Napoleonic era had more or less condoned similar conduct by American shipbuilders. The sums awarded by in the Alabama Arbitration were distributed to ship owners and cargo owners by means of a judicial process. Many of the beneficiaries had been indemnified by their insurers in the decade prior to the distribution, and some insurers subsequently invoked subrogation and indemnity principles to recoup their payments. In 1882 the House of Lords in Burnand v Rodocanachi (1882) 7 App Cas 337 rejected a claim of that type by Lloyd’s underwriters. On the face of things the decision looks an entirely conventional ruling on the limits of subrogation, and is treated by contemporary and modern textbooks as such, but there is no earlier or later authority denying recovery to underwriters in such circumstances. The reasoning in Burnand is not merely of historical interest. It is likely to be the basis of pivotal arguments in a series of current disputes concerning the insurance rights of owners of houses damaged in the Christchurch earthquakes of 2010 and 2011 following the sale of their houses and assignment of insurance rights to the purchasers. This paper will consider what was really going on in Burnand and whether the result has any wider modern implications.


Paper 5

Insuring vs. investing in litigation: a comparative legal history of litigation insurance and litigation investment.

Prof. Dr. Willem H. van Boom (Leiden University)

Nowadays, the societal benefits of insurance against the risks of litigation are widely acknowledged. The idea of insuring against litigation risks by means of liability insurance, legal expenses insurance and similar risk pooling instruments does not seem to repel us anymore. In the not so distant past, this was different. Well into the 19th and early 20th century, the idea of shielding insureds against the risks of litigation was held by some to run counter to a balanced operation of the legal system. Rather, it was thought that such instruments would invite moral hazard by fueling risk-taking behaviour and would thus cause courts to be inundated with unmeritorious claims and undeserving defendants. For this reason, in the past some forms of insurance were considered to be contra bonos mores. Also, legal expenses insurance was sometimes suspected to fuel litigation rather than to stimulate amicable settlement of disputes and thus to interfere with a balanced operation of the law.

Although nowadays the beneficial effects of these types of insurance are hardly contested as such, a similar dismissive narrative continues to dog the investment in litigation gains. Such arrangements, although sometimes even classified as ‘insurance’, can be found in legal systems which allow ‘no cure no pay’ contingency fees for attorneys, third party litigation funding and similar instruments of ‘litigation investment’. Some jurisdictions have a long history of legal obstacles standing in the way of this type of investment (eg., the prohibition of maintenance, champerty and barratry under common law and the doctrine of ‘retrait litigieux’ under French law), while others seem to warming up to the idea of ‘litigation investment’. This paper addresses these issues from a comparative legal historical perspective. It focuses on the degree of accceptance in the legal debate of the concept of insurance against litigation loss as compared to the concept of litigation investment. The findings of the paper may add to our understanding of the historical paths of both phenomenons and may also predict near future developments.


Paper 6

Marine Cargo Insurance: Analogies Drawn Between Natural Death of Slaves by Mortality and Loss of Perishable Cargo in Early Case Law.

Ayşegül Buğra (Koç University)

The Marine Insurance Act (MIA) 1906 of the United Kingdom is a statutory instrument applicable to marine insurance policies, and acts as a codification of case law up to the early 20th century. It contains a delay exclusion in s 55(2)(b) providing that “unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against”. This statutory exclusion originates from an acclaimed common law exclusion that allegedly rests upon the authority of a small number of decisions from the 18th and 19th centuries. Almost identical versions of the MIA 1906 have been enacted in other common law jurisdictions such as Canada, Australia, New Zealand and Hong Kong, and the relevant exclusion also made its way as a contractual exception into the Institute Cargo Clauses (ICC) that are in use extensively throughout the world. The application of the exclusion is hence considerably wide; yet the earlier authorities are not far from being controversial as to whether they could indeed justify the presence of s 55(2)(b). This paper seeks to go to the root of the exclusion and to critically analyse this controversy by reference to relevant authorities on delay and their authority as precedent.
4 authorities marked the law then applicable which were cited in contemporary works on marine insurance law as having been the case law paving the way for s 55(2)(b). These were namely Gregson v Gilbert (1783) 3 Douglas 232 (also know as “The Zong” case); Tatham v Hodgson (1796) 6 T.R. 656; Lawrence v Aberdein (1821) 5 B. & Ald. 107; and Taylor v Dunbar (1869) LR 4 CP 206. The first of these cases, where a –then- cargo of slaves had perished, was applied in the second, which was also about slaves. What is striking, and therefore is the reason why this abstract is proposed, the fact that the last authority which has not still been overturned by English courts cited and followed the Court’s approach in Tatham v Hodgson even though the cargo in that case was animals and not slaves, and that slavery was abolished by the time Taylor was decided. Furthermore, the interpretation of delay in Hodgson was carried out by the Court on the basis of a statutory exception found in section 10 of the 1794 Act prohibiting the insurance on slaves for losses caused by natural death or ill-treatment, which provided that “no loss or damage shall be … recoverable on account of the mortality of slaves by natural death, or ill treatment or against loss by throwing overboard…” (emphasis added). No such exception was obviously intended for animals, which was the subject-matter insured as per the facts in Taylor. The authority of the latter and the application of Hodgson in that case is therefore highly controversial, and it will be suggested in the conference paper, that it shall no longer be followed.

NB: A relatively short account of the above-mentioned cases is already provided for in the book of the author in ‘Insurance Law Implications of Delay in Maritime Transport’ (Informa Law from Routledge, 2017). This paper seeks to put these cases into historical context and approach the delay exclusion from the angle of the analogy made between cases on animals and slaves in the 19th century, which does not appear in the book. The author already carried out research at National Archives and London Metropolitan Archives on the Zong cases and has therefore access to the copies of the original documents thereof.