Book Review: London Marine Insurance 1438–1824: Risk,Trade,and the Early Modern State by Adrian Leonard

Since the turn of the millennium, the historiography on marine insurance in the medieval and early modern world has flourished. Nevertheless, while historians have written comprehensive accounts in recent times of Renaissance Florence, early modern Amsterdam and other flourishing markets, remarkably little is still known about London, which emerged as the world's leading insurance market in the eighteenth century and remains so to this day. Adrian Leonard's monograph on the London marine insurance market is a valuable addition to the historiography, offering a powerful and erudite analysis that reflects the careful archival work the author has undertaken.

Leonard traces the development of the market from its humble origins in the fifteenth century – underpinned by a core group of merchant-insurers – through to its maturity in the eighteenth and nineteenth centuries. At the same time, he analyses the challenges that arose when new players joined the market over time, often with different motivations to the merchant-insurers. In the process, he argues that London's insurance market – driven by the alliance that emerged between the English (later British) state and the marine insurance community – was a crucial factor in the English (later British) economic divergence from continental Europe.

The book has a clear, intuitive chronological structure. Recognizing that his readers may not be specialists in marine insurance, Leonard provides a summary in Chapter 1 of the instrument, its origins, its functions and its distinctiveness in comparison to other instruments of risk transfer such as sea loans. He then traces the development of the London insurance market up to 1570, which owed a great debt to Italian merchant communities. Chapter 2 tracks the ‘unsuccessful’ first intervention into the market in the years 1574 to 1601, comprising the Office of Assurance (to register policies), the Booke of Orders (codifying insurance practice), the appointment of Commissioners of Assurance, and the subsequent establishment of the Court of Assurance (to handle disputes). These measures were introduced in response to ‘outsider-buyers who wished to perpetrate fraud against underwriters’ (73) but were undermined by jurisdictional conflicts in the city. Chapter 3 follows the market through the Nine Years’ War (1688–1697) – including the damage wreaked by the French attack on the Anglo-Dutch Smyrna convoy in 1693 – and up to the 1720 Bubble Act, which established two insurance corporations in a climate of rampant financial speculation. Nevertheless, neither corporation proved a match for the community of private underwriters, who were able to reinforce their position after 1720. Chapter 4 studies the rise to prominence of Lloyd's in the eighteenth century, alongside parliamentary interventions and common-law reforms instituted by Lord Justice Mansfield.

The book is at its most compelling in capturing the remarkable tensions between the insurance market and the public interest in the eighteenth century, with booming British trade as the backdrop to the debates these fostered. While London's underwriters made notable investments in the state debt, facilitating British participation in the French Revolutionary and Napoleonic Wars, the growing complexity of the market through incorporation, wagering and the insuring of enemy vessels divided opinion in Parliament and the city itself. In this context, New Lloyd's emerged in 1769 to try to bring order to the market by creating a membership system, allowing it to shape the behaviour and practices of market participants. Here, Leonard makes a valuable contribution to the literature on the financial revolution and the rise of the fiscal-military state, although the discussion of investment in the state debt is brief, and I hope he will pursue this in future work to develop his argument further.

The book's overarching argument may confuse the reader in a few places. Leonard places the Law Merchant – ‘an uncodified and flexible body of international rules embraced by merchants trading between national legal jurisdictions’ (4) – at the heart of his analysis. We should take seriously Leonard's broader point that the Law Merchant should be meaningful to the historian because it was meaningful to contemporaries. Nevertheless, in articulating his position on this controversial concept, which has become heavily laden with theoretical baggage, Leonard may not bring every reader with him. In one passage, Leonard remarks that the ‘Law Merchant is universal … but often it must defer to local custom. In practice, the Law Merchant too varied from place to place’ (57–8). In the next paragraph, he refers to ‘Law Merchant custom’ (58). One could be forgiven for being unclear as to the difference between ‘Law Merchant custom’ and ‘local custom’. To a certain extent, centring the Law Merchant obscures rather than clarifies his argument.

Similarly, Leonard's distinction between market insiders and outsiders might work at specific moments in time but, across the period under study, it begs many questions: chiefly, who precisely is an insider or outsider, and at what point (and how) does an outsider become an insider (or vice versa)? Despite his best efforts, Leonard verges on contradicting himself at times. He tries to distinguish between insiders – synonymous with merchant-insurers – and outsiders – ‘simply strangers [to whom?], or individuals with more nefarious designs’ (91) – through knowledge of and adherence to the rules of the game (that is, the Law Merchant), with arbitration being the preferred method of conflict resolution for insiders. Yet, in rejecting the ‘individualist/collectivist model’ used by Christopher Ebert (and by Leonard himself in a 2013 book chapter, although he does not acknowledge this) to discuss insurance markets, he argues that ‘people usually defy sweeping categorisation’ (93). ⁹ To make this point, he draws on the example of James Claypoole, who was a ‘market insider’ in the 1680s. Yet Claypoole ‘was quick to go to law, even with family members’, and ‘immediately sued’ underwriters in one case when they did not give in to his demands for immediate payment on an insurance policy – precisely the sort of behaviour Leonard characterizes throughout the book as that of an outsider (93). Again, one could be forgiven for being confused. In trying to illustrate that the ‘individualist/collectivist model’ is too homogenizing, Leonard inadvertently provides ammunition to those who would suggest that his own model is also too homogenizing.

Nevertheless, Leonard's argument is a crucial contribution to the literature on marine insurance, demonstrating that historians cannot understand the rise of the British state without looking at the marine insurance market, which helped to sustain its economy. Here, there are some wonderful parallels with Hannah Farber's recent book, Underwriters of the United States: How Insurance Shaped the American Founding. ¹⁰ Together, these works demonstrate that marine insurance can, and should, capture the interest of those far beyond the field of insurance history.