Risky Business

Risky business: pricing, governance, and integration in European insurance markets, 1400-c. 1870

This project aims to advance through collaboration the historical study of marine insurance and its institutions of governance. It will unite leading academics studying the topic in the Netherlands (Vrije Universiteit Amsterdam), Italy (Università degli studi di Parma), and the United Kingdom (University of Cambridge). The network will create and compile a multinational, public database of recorded marine insurance prices from the earliest records (c. 15th century) to c. 1870 by bringing together existing private databases (data already compiled which otherwise may be lost), and adding new data gathered from primary sources in various international archives.

Ultimately, through a future HORIZON 2020 or COST Research Grant, the network will advance this work to include more researchers and sources from more countries. Preparing this international research proposal is a key goal of the project team and its principal investigator, Dr Sabine Go.

Marine insurance is a critical underpinning of global international trade and the development of the world economy, since it allows merchants to trade with less capital than the risks of their ventures prudently demand. ‘Modern’ marine insurance (where a fee is paid in advance for risk transfer and the promise of an indemnity should an actual loss occur) was first developed in Italy in the fourteenth century. Practice developed differently in each Italian city state, then moved west and north through Spain, the Low Countries, and later to England. In each location different informal, private, or state institutions evolved or were created to manage practice.

To engender a genuine understanding of the evolution and effectiveness of such institutions, a transnational approach is essential. Through this network, scholars will approach questions about the effective governance of marine insurance through a multinational approach which follows its actual geographical development path. All previous English-language research projects have focused on a single country’s insurance market and institutions. Few in other languages have made an extensive multinational study, and none covers the long duration or extensive geographical reach of the project proposed.1 Nor does a public multinational database of historical price-points exist.

The network participants will consider the relationship between risk, institutions, and pricing. Risk was and remains a costly component of international trade. The work will search for correlations between the actual costs of insurance, the level of actual risk (such as the prevalence of privateering on specific insured sea routes), and institutional innovations in the governance of marine insurance practice (such as conflict resolution methodologies). It will attempt to isolate the impact of tangible risk and institutional developments, including market competition, on insurance pricing over centuries in discrete insurance markets. Ultimately, through the development of the multinational network and subsequent research, the project team hopes to answer the following questions:

The project will deliver insights into the development of private and public institutions connected with the evaluation and management of risk, and their role in the North-South Europe economic divergence. It will inform the articulation between private commercial enterprise and state intervention in multiple European states over a multi-century period. It will further deliver for public use a large initial database of insurance prices, which are widely sought by scholars, particularly economic historians, in the analysis of trade and transaction costs. The project’s scientific relevance arises from its extremely longue durée; its international comparative approach to the study of an important international market; from long-term analysis which will identify patterns of change and growth, not only of insurance markets, but also of international capital markets in general; and because it will show changes in actual risk and in risk perception and management.

The project’s comprehensive, international database will set a standard for recording marine insurance transactions. Whether the source of original data is insurance policies, ledger entries, or underwriters’ records, each case will be captured with as much detail as possible in a standardised format, with prices calculated as a percentage of coverage purchased. The database will be accessible to all for future research, and will include dominant insurance markets as well as smaller markets, thus facilitating micro-level research of satellite markets. It will prevent the loss of accumulated knowledge, combine isolated ‘islands’ of data, and link them through state-of-the-art database technology based on the Clariah historical database system. Milan-based Fondazione Mansutti per la storia dell’assicurazione, an institution devoted to the history of insurance, will host the database.