Did you know that the earliest forms of insurance are founded in abandoned ghost ships like the one that washed up to shore here in Miramar Beach? Like so many ships before, this one was caught in bad weather and abandoned to the sea. Unlike so many ships before, this one found its way to the safety of our beach and in amazingly good shape. The stories of boats, shipping, and weather are deeply tied to the history of insurance.
When kings and monarchs ruled the world, seas all over the globe were filled with vessels carrying cargo to and from distant ports. The world was shrinking and precious foreign goods were becoming more common. We don’t even think about it now because you can buy something made in every country in the world at your local Walmart, but back then chocolate was an extreme delicacy and corn was unheard of.
The seas were just as dangerous then and the equipment used was far less reliable. Entire seasons of crops or products could be on board, not to mention gold or irreplaceable items. Back then, ships had to cross the tip of Africa to reach the Far East, braving high seas, pirates, and dangerous storms. A successful venture could earn the risk takers a fortune but a ship lost at sea could mean bankruptcy.
As early as the 15th century businessman began making contracts with each other and ship captains, pooling together a portion of profits to build a buffer against total loss. If 9 out of 10 ventures succeeded, profit from the 9 successes were used to pay the expense of the 10th and all walked away happy. By spreading out the risk among multiple companies, one storm or one pirate attack would only have minimal damage to a company.
The largest of these groups were based in London, which still exists today - Lloyds of London. Here in Florida, it's a name we see often in the property insurance marketplace. Insurance expanded from shipping to other forms of risk. Property insurance came about in 1666 when a little bakery on Pudding Lane in London caught fire. Not only did the little shop burn down, but so did 13,000 other houses. The Great London Fire showed how all can be seriously impacted by one person’s small mistake.
Insurance is based on the idea that by all contributing a small amount, one person's catastrophic loss can be repaired. It doesn't seem fair until you become 'that one person', but like those early shippers we should recognize that our risks are just as great as anyone else's. Insurance is there for the small chance of losing your home on the beach, the truck you saved up to buy, or that baseless legal dispute.
The Phantom of the Aqua is a great reminder that although insurance premiums may seem a nuisance, they are a nuisance that provide security and stability. And if you’re ever looking for someone to blame for being required to have insurance, look to pirates on the high seas and a baker that burned down a city.