Place and importance. The contract of insurance is widely used in the modern business world. Under its terms one party, the insured, pays to a second party, the insurer, a sum of money in consideration of which the insurer agrees to indemnify the insured for any loss that may arise from some contingency stated in the contract. The contract is the policy, the sum paid as consideration, the premium. The risks which are covered by insurance are at the present time of the most varied character, and the policies written may assume many forms. The chief divisions of insurance are : Marine Fire Life Casualty. Each has its peculiar characteristics which will engage our attention. Marine insurance is the oldest form of insurance known. It is therefore natural that it should have had considerable influence in shaping the development of other forms of insurance. These facts entitle it to the first place in any consideration of insurance as a whole. Beginning of marine insurance. In the form of bottomry, marine insurance was practised among the earliest commercial nations. A loan on bottomry
was a favorite form of investment among the ancients. It united an investment with a risk, and because of the element of risk involved in a sea voyage a higher rate of return was allowed on this form of bond, even in countries where there were laws against usury. A bottomry bond is nothing more or less than a loan secured By the body of the vessel. Its equivalent in real estate is a mortgage on the property. In something like its modern form marine insurance is said to have flourished in the Hanseatic League and among the commercial cities on the Mediterranean Sea. It appears to have been introduced into England by the Lombards, but with the growth of shipping passed later into English hands. The name most distinctly associated with marine insurance in its earliest days is that of Edward Lloyd. His coffee house in London became the meeting place for business men who specialized in marine matters. At this coffee house sales of vessels were conducted regularly and the business of insurance was carried on. So strong had the insurance business become that it continued after Lloyd’s death, and resulted in the formation of the famous institution now known as Lloyd’s of London.
