MARINE INSURANCE. 64 of the insurantc piinciple to other kinds of risks. Even ill ancient times there was developed a system of quasi-insurance in the form of loans on bottomry by which risks were at least partially transferred' In the Middle Ages marine insnr- niiee on a commereial basis tirst appeaivd as early as the thirteenth century in FUuuUrs and in Portugal. The oldest legal ducuinenl relating to insurance which has come down to us consists of the ordinances issued by the magistrates of Barcelona in 14."i.5 to regulate the business of marine insurance. Marine underwriting appears to have Im'cu introduced into England by the Lombards early in the sixteenth century. By the eighteenth century that country had obtained the leading |)nsition in t)ie business, which she has since maintained. For many years marine underwriting in Eng- land was carried on exclusively by unassociated individuals and continued to be conducted on a strictly individual basis until late in the eigli- teenth" century. The first step toward the regula- tion of marine underwriting by the Lloyds .Asso- ciation (q.v.) was taken in 1779, when a printed form of policy was adopted, practically the same as the one still in use. In 1S71 the Lloyds Association was incorporated by act of Parlia- ment, the articles of incorjioration stating as the main objects of the organization the conduct of the business of marine insurance, the protec- tion of the interests of the members of the association, and the collection and publication of information in regard to shipping. It is for the faccomplishment of the last-named purpose that the association has developed its remarkable system of agencies, whose intelligence and dis- patch in gathering and reporting shipping news are uneipialed in any similar organization. Mari]i<> underwriting at Lloyds is still exclu- sively an individual transaction, though under the general supervision of the association. The method of transacting business is as follows: . merchant having a ship to insure sends through n broker a slip setting forth the characteristics of the risk he desires insurcil. . y underwriter who desires to assume a ])art of the risk places on the slip his initials and the amount he is willing to assume. No one underwriter assumes very large risks, a ship and cargo being usually underwritten by a large number of individuals, each of whom carries from £100 to £.^00. The responsibility of each underwriter is limited to the amount for which he has subscribed. When the entire amount has lieen subscribeil. the policy is maile out and signed by those who have already ]iut their initials on the slip. In the seventeenth century two insurance com- panies, the Royal Exchange ami the London, were authorized to transact a marine business, while the privilege was denied to all other companies. These two companies appear to have done little nmrine underwriting. In 18'2) the monopoly re- strict icm was removed, and since that time many companies have gone into the business. Even these companies, however, find it advantageous to work through Lloyds, each of thcni having a representative on the lloor of that association. In .America marine insurance was the first form to h(. written. In 1750 the first office was established, although a large amount of indi- vidual underwriting had previously been carried on. This ollice was opened in New York, and was known as the Old Insurance Olfice. The MARINE INSURANCE. method of conducting business was by individual underwriting, after the manner of the English Lloyds. It was not until near the end of the eighteenth century that corporations took up the business of marine underwriting. The first in the field were the Insurance Comi)any of North America and the Insurance Company of the State of Penn- sylvania. Both were located in Philadelphia, and both began marine underwriting in 1794. The growth of the business was rapid and was greatly stinuilated by the expansion of American shipping during the period of the Napoleonic wars in Europe. The companies rapidly ab- sorbed the entire business of the country, and by the year 182.) individual underwriting was prac- tically at an end in the I'nited States. The period of the Civil War subjected the marine companies to a severe strain, and several of them succumbed. Since that time the condi- tion of marine underwriting has rellected the con- dition of the shipjiing industry of the country. The great growth of the business has been seen, not in the insurance of risks on the high seas, but in the insurance of risks on inland waters. The lieadi|uarters for the insurance of shipping on the laKcs is Chicago. The business is espe- cially hazardous on account of the limited area over which the operations extend, and a conse- quent great fiuctuation in loss-rate. The general principles on which marine in- surance is based are not different from those underlying other forms of insurance, but in practice the former presents a number of peculiar features. The Policy. The common form of marine pol- icy is the 'voyage' policy, that is, a policy to be in force for a voyage from one specified ])ort to another. Occasionally, however, a ship is in- sured under a 'tin)e' policy, which is to be in force for a specified time, usually a year. The chief practical distinction between the two is that with a voyage policy there is always a war- ranty, express or implied, that the ship is sea- worthy at the beginning of the voyage, while with a lime ]iolicy no such warranty is implied. .
'op<'ir policy is one which provides that in
case of total loss the amount of the indemnity shall be ile(i>rmined by ascertaining the amount of loss actually sulVercd. It is incumbent upon the insured to prove the value of the destroyed projicrty. A 'valued' policy, on the other hand, jirovide's that in case of total loss the amount slated in the policy shall be regarded as the value of the insured property and paid as in- demnity. Valued policies are more frequently issued on the ship, while the cargo is more com- monly covered by an open policy. The use of the valued policy has undoubtedly teniled to in- crease the amount of over-insurance and delib- erate destruction of vessels. This practice is especially easy under the system of individual underwriting prevailing at Lloyds, since the un- derwriter frequently knows little or nothing about the ship he is insuring beyond what is slated in the slip. Oii.iK<r.s. Tin- objects most commonly insured under a marine policy are ship, cargo, and freights. Sometimes other objects are covered, such as (he expected profits of the voyage, or, more frequently, the liability for damages on ac- count of collision. The insurance of freight is an illustration of a peculiar feature of marine
