In this the fourth article on Insurance Blog within this series exploring the origins of insurance we move to Medieval Europe and the invention of separate insurance contracts in 14th Century Genoa…
As you may recall from earlier articles within this series, both the Romans and the Greeks had contributed to the development of insurance, shaping it into the complex financial product that it is now quite considerably. However it was from the ashes of the Roman empire that we see insurance start to fully develop.
As we move through history and reach the medieval period which is universally acknowledged as beginning when the western Roman Empire fell in 471AD, we see the Guilds rise to prominence and amongst their functions is something remarkably akin to that of the early Roman Burial Clubs. However, they also provide rudimentary medical insurance, fire insurance, marine insurance and even personal accident insurance to their members as well as a whole host of other social and economic benefits.
In fact despite the fall of the Empire the insurance practices that have become part of every day life across Europe for Merchants, Noblemen and Serfs alike remain in place. With the importance of insurance now firmly established as a key element within any society with commerce at its heart, the varieties of insurance and the complexity of the products continues to develop throughout the Middle Ages.
Again it was Maritime insurance which proved to be the area which established itself as both the innovative and indeed original category of insurance. This is of course is easily attributable to the fact that at this point in history, the overwhelming driving force in any economy was the merchants of the sea. Boat Insurance developed more rapidly and technically than any other form of insurance at the time out of sheer economic necessity.
After the fall of the Western Roman Empire, a number of successful city-states developed to fill the vacuum created by the failure of Rome. These included Pisa, Milan, Venice and Genoa. Each of these mini- empires have a rich and fascinating history, but for the world of insurance, it was Genoa who would play the major role.
In fact Genoa is able to lay a fairly indisputable claim to be the home of modern insurance.
It was here in the fourteenth century that we saw some huge landmark moments appear on the insurance development time-line. It is at this point in history that we start to see commercial insurance begin to establish itself as a product independent of investment. This is evident from both the inception and invention of insurance contracts which were neither included as a guild benefit, nor based on a loan.
The earliest ever recorded insurance policy discovered to date is believed to be between Amiguetto Pinello (the insurer) and Tomaso Grillo (the insured) and is dated the 13th February 1343. The contracts between the two parties are hugely important in that they mark the first steps away from what are now the ancient and archaic traditions of Marine Loans.
Whilst traditional marine loans of ancient Rome and Greece (and even Mesopotamia before them) had provided adequate coverage throughout the ancient and early medieval periods, as the commercial revolution that was rapidly spreading throughout the coastal micro empires of Italy and the Mediterranean grew, these archaic laws no longer succeeded in meeting the requirements of the modern ‘sedentary merchant’.
So the need for insurance to once again evolve led to the birth of the stand alone insurance contract.
A fascinating insight into the politics of the time is hidden away in this original contract. In fact much of the content of this original contract was necessarily fictitious. This fictitious wording was required to cloak the contracts within the phraseology of Roman Law, as at this point in history insurance contracts still had no legal standing Per Se.
In fact the work of these early pioneer insurers was constantly frustrated by existing clerical usury law and the insistence of those in authority that despite the legislation being out dated, it was relentlessly enforced.
It seems that there are more similarities than we could have imagined then!
In the next article within this series we shall look at post-renaissance Europe and perhaps arguably the most important period in the history of insurance ever – the 17th Century. This is where we see insurance arrive at what is now regarded as it’s modern day home – Lloyd’s of London.