Early marine insurance

2.1 The concept of marine insurance first appears to have been introduced to England in the thirteenth century by Lombardian merchants. This early form of insurance was based on the marine insurance that had been developed in Europe in the early part of the twelfth century. The Royal Exchange in Lombard Street was established under a Royal Charter in 1570; at this stage merchants themselves were the main providers of insurance. Despite its common heritage with insurance law in Europe, from the sixteenth century onwards the law in England began to diverge significantly from that on the continent. The Chamber of Assurances at the Royal Exchange, established in 1577, doubled as both an underwriting and arbitration centre and a register for marine policies.1 One of the earliest recorded London policies was issued in 1547 on the cargo of the vessel Santa Maria Venetia;2 the policy was written in Italian, but subscribed to by London merchants. The earliest known insurance claim was filed in the Court of Admiralty in 1524,3 and in the second half of the sixteenth century most insurance cases were decided in Admiralty courts. The first reported English judicial ruling upon a marine policy in the King’s Bench was in 1588. By the end of the sixteenth century the concept of Bottomry Bonds was well established; under such bonds the shipowner received a loan in advance of the voyage, on security of the vessel, to be repaid with interest if the vessel arrived safely within the agreed period; however, the assured would retain the benefit of the loan if the vessel was lost or repairs were required to complete the voyage.4 The Merchant Assurances Act 1601 established a special Court on Policies of Assurance. The Act, under which the Lord Chancellor was to appoint a standing commission, failed to work as intended and was amended in 1662, but judgements could be enforced against vessels and cargos. The Act lapsed and was replaced by a system of arbitration established under the Arbitration Act 1698.