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History of Insurance in England

Of the different kinds of Insurance or Assurance, as it is indifferently called, Marine Assurance is the oldest, so old, that no one knows when the custom began, as we see by the preamble of 43 Eliz., c. 12 (1601).

An Acte concerninge matters of Assurances, amongste Marchantes. Whereas  it ever hathe bene the Policie of this Realme by all good meanes to comforte and encourage the Merchante, therebie to advance and increase the generall wealthe of the Realme, her Majesties Customes and the strengthe of Shippinge, which Consideration is now the more requisite, because Trade and Traffique is not, at this presente, soe open as at other tymes it hathe bene; and, whereas it hathe bene tyme out of mynde  an usage amongste Merchantes, both of this Realme and of forraine Nacyons, when they make any greate adventure (speciallie into remote partes) to give some consideracion of Money to other persons (which commonlie are in noe small number) to have from them assurance made of their Goodes Merchandizes Ships and Things adventured, or some parte thereof, at such rates and in such sorte as the Parties assurers and the Parties assured can agree, whiche course of dealinge is commonly termed a Policie of Assurance; by meanes of whiche Policies of Assurance it comethe to passe, upon the losse or perishinge of any Shippe there followethe not the undoinge of any Man, but the losse lightethe rather easilie upon many, then heavilie upon fewe, and rather upon them that adventure not, then those that doe adventure, whereby all Merchantes, speciallie of the younger sorte, are allured to venture more willinglie and more freelie: And whereas heretofore suche Assurers have used to stand so justlie and preciselie upon their credites, as fewe or no Controversies have risen there upon, and if any have growen, the same have from tyme to tyme bene ended and ordered by certaine grave and discreete Merchantes appointed by the Lord Mayor of the Citie of London, as Men by reason of their experience fitteste to understande, and speedilie to decide those Causes; untill of late yeeres that divers persons have withdrawen themselves from that arbitrarie course, and have soughte to drawe the parties assured to seeke their moneys of everie severall Assurer, by Suites commenced in her Majesties Courtes, to their great charges and delayes: For Remedie  wher of be it enacted,” &c.[1]

The Oldest Policy of Assurance I have been able to find is mentioned in the 6th Report of the Royal Commission on Historical MSS., where it is catalogued “1604. A Charter partie, An Assurance of fish from Newfoundland.”[2]

Mr F. Martin, who wrote an exhaustive book on the History of Lloyd's and Marine Insurance, says: “The earliest English policy of marine insurance, which we have been able to discover, bears date 1613, and though not a document issued actually by underwriters, but, to all appearances, a copy made for legal purposes, with some lawyer's notes attached, may be found historically interesting. The discovery was—with others subsequently to be referred to—the result of long and laborious researches among the, as yet, only partly known literary treasures of the Bodleian Library at Oxford. The original is among the Tanner manuscripts, numbered 74, fo. 32, and the manuscript is endorsed, ‘Mr Morris Abbott's pollesye of Assurance dated the 15 of ffebruary 1613, 11 Jacobi.'”

A very old policy hangs, framed and glazed, on the wall of the Committee Room at Lloyds, dated 20th Jan. 1680, and it is for £1200—£200 on the ship and £1000 on the goods. The ship was the Golden Fleece, the voyage from Lisbon to Venice, and the premium was £4 per cent.!

Underwriting marine risks was in private hands, and although the underwriters had, some of them, offices of their own, most of the business seems to have been done at Coffee Houses, such as Hain's, Garraway's, or Good's; and there was also a central office at the Royal Exchange, as is shown by several early advertisements, one of which is the following, from the City Mercury, No. 255 (1680):

“Whereas Mr Daniel Parrot caused a Politie to be made Septemb. 28 last, on the Charles of Plymouth, from Newfoundland to Cadiz, which is subscribed by several Insurers, and the Politie lost, and a new Politie made: It is desired that all persons that have subscribed the Politie would come into the Insurance Office, and subscribe the new Politie, that it may be known who the Insurers are; and if any one has found the old Politie, they are desired to bring it to Mr Tho. Astley, at the Insurance Office on the Royal Exchange, and they shall be well rewarded.”

The origin of the present Corporation of Lloyd's was in the Coffee House of Edward Lloyd, who, in 1688, lived in the very busy commercial thoroughfare of Tower Street, as appears from an advertisement in the London Gazette  of 18/21 Feb. 1688, relating to a robbery. In 1691 or 1692 he moved to a more central situation, at the Corner of Abchurch Lane and Lombard Street, where, in the summer of 1696, he started the famous Lloyd's News, of which the Bodleian Library has a complete set, with the exception of the first seven numbers. It only reached seventy-six numbers, when it was discontinued for the reason given in No. 138 of the Protestant Mercury, Feb. 24/26, 1696 (1697). “Whereas, in Lloyd's News  of the 23rd instant, it was inserted, That the House of Lords Received a Petition from the Quakers, that they may be freed from all Offices, which being groundless and a mistake, he was desired to rectifie it in his next: But return'd for Answer, it was added by the Printer, that he would Print no more at present.” And it remained in abeyance till 1726, when it was resuscitated under the title of Lloyd's List, a name which it now bears.

Lloyd's Coffee House served its purpose to the Underwriters for a time, but they found it inconvenient, and wanted a place of their own, so they took rooms in Pope's Head Alley, which they called New Lloyd's Coffee House, whilst they were looking out for suitable permanent premises. Here, towards the end of 1771, seventy-nine Underwriters met, and each subscribed £100 towards building a “New Lloyd's.” After a considerable amount of house hunting, it was reported by the Committee, on Nov. 24, 1773, “that after many fruitless researches to obtain a Coffee House in Freeman's Court and other places, they had succeeded with the Mercer's Company for a very roomy and convenient place over the North West Side of the Royal Exchange, at the rent of £180 per annum”: and this selection being approved of, they moved into their new quarters on 5th March 1774. There they have abode ever since, except for a brief period when the Exchange was re-building after its destruction by fire in 1838.

The underwriters did not always confine themselves to marine risks. Malcolm, writing in 1808, says: “The practice of betting is tolerably prevalent at present, and by no means confined to any particular class of the community. In fact, I am afraid it might be traced very far back in the history of our Customs; but it will be sufficient, for the information of the reader, that I present him with an article from the London Chronicle  of 1768, which, I think, will remind him of some recent transactions in the City.

“‘The introduction and amazing progress of illicit gaming at Lloyd's Coffee House is, among others, a powerful and very melancholy proof of the degeneracy of the times. It is astonishing that this practice was begun, and has been, hitherto, carried on, by the matchless effrontery and impudence of one man. It is equally so, that he has met with so much encouragement from many of the principal underwriters, who are, in every other respect, useful members of society: and it is owing to the lenity of our laws, and want of spirit in the present administration, that this pernicious practice has not, hitherto, been suppressed. Though gaming in any degree (except what is warranted by law) is perverting the original and useful design of that Coffee House, it may, in some measure, be excuseable to speculate on the following subjects:

Mr Wilkes being elected Member for London, which was done from 5 to 50 guineas per cent.

Ditto for Middlesex, from 20 to 70 guineas per cent.

Alderman B—— d's life for one year, now doing at 7 per cent.

On Sir J—— H—— being turned out in one year, now doing at 20 guineas per cent.

On John Wilkes's life for one year, now doing at 5 per cent. N.B.—Warranted to remain in prison during that period.

On a declaration of war with France or Spain, in one year, 8 guineas per cent.

And many other innocent things of that kind.

But, when policies come to be opened on two of the first Peers in Britain losing their heads, within a year, at 10s. 6d. per cent.; and on the dissolution of the present Parliament, within one year, at 5 guineas per cent., which are now actually doing, and underwrote chiefly by Scotsmen, at the above Coffee House; it is surely high time for administration to interfere; and, by exerting the rigours of the laws against the authors and encouragers of such insurances (which must be done for some bad purpose), effectually put a stop to it.'”

In the secretary's room at Lloyd's hangs the following policy:—“In consideration of three guineas for one hundred pounds, and according to that rate for every greater or less sum received of William Dorrington; we, who have hereunto subscribed our names, do for ourselves, and our respective heirs, executors, administrators, and assigns, and not one for the other or others of us; or for the heirs, executors, administrators and assigns of the other or others of us, assume, engage and promise that we respectively, or our several and respective heirs, executors, administrators, and assigns, shall and will pay, or cause to be paid, unto the said William Dorrington the sum and sums of money which we have hereunto respectively subscribed without any abatement whatever.

In case  Napoleon Bonaparte shall cease to exist, or be taken prisoner on, or before, the 21st day of June 1813, commencing from this day. London 21 May 1813.”

Although originally intended for the Insurance of Marine risks only, other policies can be taken out at Lloyd's—such as Fire; against Burglary—although this was also insured against during the South Sea Mania, under the title of “Insurance from housebreakers”; against any lady having twins. À propos  of this, there was an underwriter, some years ago, at Lloyd's, named Thornton—who was fond of writing speculative risks, especially overdue ships, and who died very wealthy. He had a bet with a fellow underwriter—that he should pay him £1000 for every child the Queen bore; but, if there should be twins, at any time, then Mr Thornton was to be paid £20,000. Insuring that a race horse shall run in a particular race; on interest under a will; employer's liability to workmen; accidents by tram-cars; solvency of commercial firms; earthquakes; and during the six months preceding the Queen's Jubilee of 20thJune 1897 a vast amount was underwritten, guaranteeing the Queen's life till that date—and also assuring that she should pass through certain streets. But these policies are not recognised by the Committee, and, should the underwriter fail, they do not rank for dividend out of the caution money held by the Corporation.

Besides Lloyd's Association, where each Member underwrites the amount he chooses, there are Marine Insurance Companies, which are of great utility for the large sums they underwrite. These are not all English, there are many foreign Marine Insurance Companies having Offices in London, as may be seen by the following list, which is very far from being complete:—Baden Marine, Bavarian Lloyd Marine, Boston Marine, Canton Marine, German Marine, Italia Marine of Genoa, Nippon Sea and Land, North China, Rhenish Westphalian Lloyds, Switzerland Insurance, Yangtze Insurance Association, &c., &c., &c. The first English Marine Insurance Companies were the Royal Exchange and the London, both established in 1720.

Insurance against Fire began the year following the Great Fire of London (1666), and the first Company for Assurance against Fire was the Phœnix, established about 1682, first at the Rainbow Coffee House, in Fleet Street, and, afterwards, near the Royal Exchange. Their system was to pay 30s. down, and insure £100 for seven years. The second was The Friendly Society, in Palsgrave Court, without Temple Bar, which was the first (in 1684) that insured by mutual contribution, where you could insure £100 for seven years by paying 6s. 8d. down and an annual subscription of 1s. 4d. And, thirdly, The Amicable Contributors, at Tom's Coffee House in St Martin's Lane (commenced about 1695), where a payment of 12s. would insure £100 for seven years, at the expiration of which time 10s. would be returned to the assured. This Society seems to have changed its name to the Hand in Hand Fire Office, who gave up their two establishments, at Tom's Coffee House, and the Crown Coffee House, behind the Exchange, to more suitable premises in Angel Court, Snow Hill, and notified the change in the Gazette  of 1st Jan. 1714.

This Insurance Company (The Amicable) is generally considered to be the first institution for the Insurance of Lives, although Life Annuities had been in practice for a long time, but a writer in Chambers' Encyclopædia  (Vol. vi., p. 175, ed. 1895) says that it did not begin life business until 1836. The same writer continues: “The earliest known Life Assurance Company was established in 1699, and called the ‘Society of Assurance for Widows and Orphans.' This was what, now, would be called an Assessment  Company. It did not guarantee a definite sum assured, in consideration of a fixed periodical premium; but, by its constitution it was to consist, when full, of 2000 members, who were to contribute 5s. each towards every death that occurred amongst the members.

“The earliest life assurance policy, of which particulars have been preserved, was made on 15th June 1583, at the ‘Office of Insurance within the Royal Exchange,' in London. Full details of this Policy have been preserved, because it gave rise to the first authentic disputed claim. The policy was for £383, 6s. 8d., to be paid to Richard Martin, in the event of William Gybbons dying within twelve months, and the policy was underwritten by thirteen different persons who guaranteed sums of from £25 to £50 each. The premium was at the rate of 8 per cent. William Gybbons died on the 28th May 1584, and the underwriters refused to pay because he had survived twelve months of twenty-eight days each. The Commissioners appointed to determine such cases, held that the twelve months mentioned in the policy meant one full year, and they ordered the underwriters to pay. These appealed to the Court of Admiralty, which had jurisdiction in such cases, and where, in 1587, two judges upheld the decision of the Commissioners, so that, eventually, the underwriters had to pay.”

Mr Francis[3] tells us of the first known fraud in Life Assurance. “About 1730, two persons resided in the then obscure suburbs of St Giles's, one of whom was a woman of about twenty, the other, a man, whose age would have allowed him to be the woman's father, and who was, generally understood to bear that relation. Their position hovered on the debatable ground between poverty and competence, or might even be characterised by the modern term of shabby genteel. They interfered with no one, and they encouraged no one to interfere with them. No specific personal description is recorded of them, beyond the fact that the man was tall and middle aged, bearing a semimilitary aspect, and that the woman, though young and attractive in person, was, apparently, haughty and frigid in her manner. On a sudden, at night time, the latter was taken very ill. The man sought the wife of his nearest neighbour for assistance, informing her that his daughter had been seized with sudden and great pain at the heart. They returned together, and found her in the utmost apparent agony, shrinking from the approach of all, and dreading the slightest touch. The leech was sent for; but, before he could arrive, she seemed insensible, and he only entered the room in time to see her die. The father appeared in great distress, the doctor felt her pulse, placed his hand on her heart, shook his head, as he intimated all was over, and went his way. The searchers came, for those birds of ill-omen were, then, the ordinary haunters of the death-bed, and the coffin, with its contents, was committed to the ground. Almost immediately after this, the bereaved father claimed from the underwriters some money which was insured on his daughter's life, left the locality, and the story was forgotten.

“Not very long after, the neighbourhood of Queen Square, then a fashionable place, shook its head at the somewhat unequivocal connection that existed between one of the inmates of a house in that locality, and a lady who resided with him. The gentleman wore moustaches, and though not young, affected what was then known as the Macaroni style. The Captain, for that was the almost indefinite title he assumed, was a visitor to Ranelagh, was an habitué of the Coffee Houses; and, being an apparently wealthy person, riding good horses and keeping an attractive mistress, he attained a certain position among the mauvais sujets  of the day. Like many others at that period, he was, or seemed to be, a dabbler in the funds; was frequently seen at Lloyd's and in the Alley; lounged occasionally at Garraway's; but appeared, more particularly, to affect the company of those who dealt in life assurances.

“His house soon became a resort for the young and thoughtless, being one of those pleasant places where the past and the future were alike lost in the present: where cards were introduced with the wine, and where, if the young bloods of the day lost their money, they were repaid by a glance of more than ordinary warmth from the goddess of the place; and to which, if they won, they returned with renewed zest. One thing was noticed, they never won from the master of the house, and there is no doubt, a large portion of the current expenses were met by the money gambled away; but, whether it were fairly, or unfairly gained, is, scarcely a doubtful question.

“A stop was soon put to these amusements. The place was too remote from the former locality, the appearance of both characters was too much changed to be identified; or, in these two might have been traced the strangers of that obscure suburb, where, as daughter, the woman was supposed to die; and, as father, the man had wept and raved over her remains. And a similar scene was, once more, to be acted. The lady was taken as suddenly ill as before; the same spasms at the heart seemed to convulse her frame; and, again, the man hung over her in apparent agony. Physicians were sent for in haste; only one arrived in time to see her, once more, imitate the appearance of death; whilst the others, satisfied that life had fled, took their fees, ‘shook solemnly their powdered wigs,' and departed. This mystery, for it is evident there was some conspiracy, or collusion, is partially solved when it is said that many thousands were claimed and received, by the gallant captain from various underwriters, merchants and companies with whom he had assured the life of the lady.

“But the hero of this tradition was a consummate actor; and, though his career is unknown for a long period after this, yet it is highly probable that he carried out his nefarious projects in schemes which are difficult to trace. There is little doubt, however, that the soi-disant  captain of Queen Square was one and the same person who, as a merchant, a few years later, appeared daily on the commercial walks of Liverpool; where, deep in the mysteries of corn and cotton, a constant attendant at church, a subscriber to local charities, and a giver of good dinners, he soon became much respected by those who dealt with him in business, or visited him in social life. The hospitalities of his house were gracefully dispensed by a lady who passed as his niece; and, for a time, nothing seemed to disturb the tenour of his way. At length it became whispered in the world of commerce, that his speculations were not so successful as usual; and a long series of misfortunes, as asserted by him, gave a sanction to the whisper. It soon became advisable for him to borrow money, and this he could only do on the security of property belonging to his niece. To do so, it was necessary to insure their lives for about £2000. This was easy enough, as Liverpool, no less than London, was ready to assure anything which promised profit, and, as the affair was regular, no one hesitated. A certain amount of secrecy was necessary for the sake of his credit; and, availing himself of this, he assured on the life of the niece £2000, with, at least, ten different merchants and underwriters in London and elsewhere. The game was once more in his own hands, and the same play was once more acted. The lady was taken ill, the doctor was called in, and found her suffering from convulsions. He administered a specific, and retired. In the night he was again hastily summoned, but arrived too late. The patient was declared to be beyond his skill; and the next morning it became known to all Liverpool that she had died suddenly. A decorous grief was evinced by the chief mourner. There was no haste made in forwarding the funeral; the lady lay almost in state, so numerous were the friends who called to see the last of her they had visited; the searchers did their hideous office gently, for they were, perhaps, largely bribed: the physician certified that she had died of a complaint he could scarcely name, and the grave received the Coffin. The merchant retained his position in Liverpool, and bore himself with a decent dignity; made no immediate application for the money; scarcely even alluded to the assurances which were due, and, when they were named, exhibited an appearance of almost indifference. He had, however, selected his victims with skill. They were safe men, and, from them, he duly received the money which was assured on the life of his niece.

“From this period he seemed to decline in health, expressed a loathing for the place where he had once been so happy; change of air was prescribed, and he left the men whom he had deceived, chuckling at the success of his infamous scheme.”

Nowadays, everything insurable can be insured; you can be compensated for accidents; if your plate glass windows are broken, if hail spoils your crops, or if your cattle die; the fidelity of your servants can be guaranteed: in fact, this field of permissible gambling is fully covered—whilst betting on horse racing rears its head unchecked, stock jobbers thrive, bucket shops multiply, and so do their victims.

[1]Commissioners were appointed to hear and determine such cases.

[2]In the collection of MSS. belonging to Lord Leconfield, at Petworth House, Sussex.

[3]“Annals, Anecdotes, and Legends of Life Assurance.” John Francis. 1853: Lon.