Underwriting Risk: Trade, War, Insurance, and Legal Institutions in Eighteenth-Century France and Its Empire
Date of Award
Fall 2023
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
History
First Advisor
Benton, Lauren
Abstract
Titled “Underwriting Risk: Trade, War, Insurance, and Legal Institutions in Eighteenth-Century France and Its Empire,” my dissertation focuses on maritime insurance—the earliest form of insurance—which allowed a policyholder to pay a premium and gain the right to receive an indemnity if his property was shipwrecked or captured by enemies. The key question at the center of this study relates to quantitative reasoning during the eighteenth century: how did underwriters in early modern markets translate the variegated risks that ships and cargoes were exposed to at sea into a number, an insurance premium? I approach this question using new and extensive archival sources: over 4,000 maritime insurance records from three French port cities, Marseille, Bordeaux, and Nantes. I have sampled these contracts mainly from notarial registers that document an estimated 150,000 transactions between the 1680s and the 1820s and have been virtually ignored in the scholarship. I explore this corpus through quantitative analysis, and I use business letters and lawsuits that stemmed from insurance claims to gain further insight into underwriters’ and traders’ strategies and into the enforcement of insurance contracts. Early modern underwriters were able to estimate, and to put a price on, the risks of navigation according to stable and reasonable principles. Since it was common practice in the eighteenth century for merchants to purchase insurance coverage in a distant port and across state borders, competition kept insurance rates in check. Peacetime premiums came close to approximating the actual frequency of accidents at sea. French merchants and underwriters did not determine these prices based on quantitative or actuarial reasoning, however, because global statistics on shipwrecks and piracy were impossible to obtain in the pre-industrial world. Underwriters relied instead on practical expertise and proto-probabilistic reasoning. These findings break with the mainstream of the history of insurance. The industry’s development is often framed as a morality tale in which the mathematics of probability and the corporate form of business organization triumph over a search for security in religious practices. In its most anglo-centric versions, this narrative depicts London as the cradle of the insurance industry and traces a direct line from the scientific proceedings of the Royal Academy to Lloyd’s Coffee House. My dissertation shows that marine insurance was commercialized on a large scale in French ports during the seventeenth and eighteenth centuries, before underwriters had more than intuitive knowledge of probability. Market structure was highly decentralized at this stage, with individual wholesale merchants and retired sea captains playing the critical roles, instead of specialized insurance companies. Actuarial science and statistics were not the centerpiece of insurers’ skills because marine insurance in the eighteenth century did not only protect ships and cargoes from predictable risks that were primarily seasonal and geographic. It also functioned as insurance against political uncertainty. It is difficult to overstate how profoundly conflicts and wars destabilized marine insurance markets and shaped the early development of this financial instrument. Merchants and underwriters invested most of their resources in managing the always-lurking danger of war, tuning in to their correspondence and news networks and remaining alert to signs of imperial conflicts brewing. Ultimately, such tactics were insufficient, and scandals and wars periodically placed untenable pressures on insurance markets, leading to state interventions. The marine insurance sector demanded special tutelage and regulation from the state. Unanticipated blockades and privateering raids on French shipping prompted efforts at different levels of government to study recent trends in insurance rates and to adjust premiums in crisis markets to negotiated, ‘equitable’ prices.
Recommended Citation
Hope, Mallory, "Underwriting Risk: Trade, War, Insurance, and Legal Institutions in Eighteenth-Century France and Its Empire" (2023). Yale Graduate School of Arts and Sciences Dissertations. 1226.
https://elischolar.library.yale.edu/gsas_dissertations/1226
