INSURANCE LAW, A body of statutes controlling the business of insurance has grown with the growth of insurance in modern times in all civilized lands. As an element of trade, insurance necessarily came under certain regu lations from its earliest use, and with its ex pansion from local to national and international proportions and from almost private utility to a general social and commercial necessity, pub lic control has increased to cover almost every detail of the business.
The insurance of vessels and their cargoes at sea was the earliest line to attain import ance, and the practice of individual owners sharing losses seems to have been an ancient one. Naturally certain customs and ordinances covering these transactions came first to be recognized and established at the larger sea ports. Before the fall of Constantinople in 1453, the world-trade routes lay east and.west from the great seaports of the Mediterranean Sea,— Florence, Venice and Genoa. The traffic east was by land, and west by sea. When the conquering Turks shut off the overland traffic east, it became necessary to search out another route, with the resulting discovery of the way around the southern point of Africa by the Portuguese and of a new western world by Columbus. The seaports of Portugal, Spain and the Netherlands now became busy distribut ing centres of trade from the Far East and West to north and and central Europe. The longer sea voyages made desirable a better security against loss, and this involved more government regulation.
In the 14th century, when trade flourished at the ports of Italy, of the Spanish Peninsula and at Bruges in Flanders, the practice of sharing losses among the interested individual owners called forth simple ordinances to de fine the practice and to outline the necessary agreement or policy form. In more recent times the trade centres of Europe have drifted largely to northern Europe, but in the London Lloyds is found the ancient practice of indi viduals, under certain regulations, underwriting sea risks to the largest amounts. Since the
opening of the 19th century, however, there have come into being corporations which underwrite marine contracts as a business venture on the basis of average loss, such as now underlies all other forms of insurance, and both the world's increasing need and the formation of purely business companies to meet the need for the protection of water-borne commerce have made necessary a larger public control of marine insurance.
In America a similar development occurred to that in the Old World. As the sea trade of the northern-eastern Atlantic ports sprang up, during the later colonial period, interested in dividuals shared the risk of the traffic as inter insurers, until at length the expanding need of the independent States of the Union called for the larger service of capitalized companies, through which the business of insurance was more and more brought into the purview of law.
Meantime the demand arose also for other forms of protection,— insurance against the hazard of fire, and death, and more recently against sickness, accident and the numerous other hazards commonly grouped as casualty insurance. The great London fire of 1666 em phasized the necessity for insurance against fire and shortly after the beginnings of fire insur ance the first forms of modern life insurance began to appear.
In each case, individual sharing of losses, or the principle of mutuality, was brought into use, but eventually each line has come to ex tensive application under organizations of joint stock corporations, although in America life insurance is transacted mostly by companies without capital stock. Public regulation was at first concerned with the term of the con tract, called a policy, but with the expansion of the service came the necessity for securing the integrity of the corporate insurer by regu lations covering the investment of its funds and providing for an adequate reserve against future obligations.