Marine Cargo Insurance
1
HISTORY AND DEFINITION OF MARINE CARGO INSURANCE
Historical background
The London market
Origins of marine cargo insurance
1.1 The origins of marine insurance are obscure1 and not as ancient as, for example, general average.2 The written evidence includes an early form of marine cargo policy prescribed by a Florentine Ordinance of 1523 which insured goods on a named ship against dangers of the sea, fire, jettison and like perils “even such as cannot be thought of”.3 Many of the risks insured under that form of policy show a remarkable resemblance to cargo insurance cover for named perils still underwritten today.4 The first recorded policies in English followed in 1555, though these early policies were less developed than the Italian forms.5 The sacking of Antwerp by the Spanish in 1576 led to London becoming a centre for marine insurance and benefiting from the wordings and customs that had originated in Florence and Genoa and had spread to Northern Europe, particularly Brussels and Antwerp.6 The development of London as a marine insurance centre was opportune as it coincided with the expansion of markets and trade in the reign of Elizabeth I.7 1.2 In 1601 Parliament first regulated marine insurance by an Act of Elizabeth I entitled “An Act Concerning Matters of Assurances Used Among Merchants”,8 which formalised a system for resolving disputes by ad hoc arbitration by a Court of Aldermen of the City of London.9 Works on insurance law and practice were by then in existence as there was published at Rouen about the year 1600 a little book called Le Guidon de la Mer containing forms of marine policies then in use and a general account of marine insurance.10 It was in the context of the history of marine cargo insurance that MacKinnon LJ said, “this law of marine insurance is nothing more than a collection of rules for the construction of the ancient form of policy, and such additions as are from time to time annexed to it”.11 By 1613 a cargo policy insured goods to be shipped on the vessel Tiger from London to Zante on terms that reflected the main substance of the Lloyd’s policy as it would become and as it existed until 1982.12 1.3 The increase in trade in the nineteenth century led, in turn, to the further development of marine insurance law in England, which, as it exists today, was much influenced by the use in the nineteenth century of special juries of experienced merchants, brokers, adjusters and insurers who assisted the judges, notably Lord Mansfield, in deciding commercial and mercantile cases.13 This created a body of 2,000 cases, some in the form of jury decisions without reasons, but others with reasoned judgments or addresses from Lord Mansfield to the jury, which articulated the fundamental rules and practices of marine insurance. These decisions, in turn, were codified by Sir Mackenzie Chalmers in the Marine Insurance Act 1906 (“MIA 1906”).14 The cases from which the law of marine cargo insurance has developed, both before and after the Act, involve shipments from all parts of the world and tell stories of cargoes from China,15 from the interior of Africa16 and journeys through South America in the face of delays caused by revolutions.17The development of Lloyd’s and insurance companies
1.4
The development of Lloyd’s of London (“Lloyd’s”) can be traced back to the coffee house of Edward Lloyd founded in about 1689,18 but it was not until the early 1770s that Lloyd’s became an organisation of underwriters under the guidance of John Julius Angerstein (the “Father of Lloyd’s”).19 Lloyd’s went on to become regulated by various Lloyd’s Acts commencing with the Lloyd’s Act 1871. Lloyd’s had long been in competition with marine insurance companies. In the early days (from 1720 onwards) the only two insurance companies authorised to conduct marine business were the Royal Exchange Assurance and the London Assurance. In 1824 marine business was opened to other companies,20 though it was not until 1884 that the Institute of London Underwriters (“ILU”) was incorporated.21