Abstract: Marine Insurance in Britain and America, 1720-1844: A Comparative Institutional Analysis

Chris Kingston


By the mid-nineteenth century, the British marine insurance market was dominated by Lloyd's of London, a marketplace in which voyages were underwritten by private individuals. In contrast, marine insurance in other countries, including the United States, was carried out mainly by joint-stock corporations. This paper examines the historical evolution of the marine insurance industry in Britain and America during its critical formative period, focusing on the information and agency problems inherent in the technology of overseas trade at the time, and on the path-dependent manner in which the institutions that addressed these problems evolved. We argue that the market was characterized by multiple equilibria because of a potential lemons problem. The regulatory environment produced by Britain's Bubble Act, and exogenous shocks including American Independence and the Napoleonic Wars, combined to bring about a bifurcation of institutional structure, the effects of which persist to the present day.