Insurance
Put a price today on a misfortune that has not happened, and sell it. This model was pushed into existence by a regulation. The sea loan of antiquity repaid a high rate of interest only if the ship arrived, so lending money and carrying risk were a single thing. Then in 1236 a decretal of Pope Gregory IX condemned it as usury: one who takes more than the principal in return for having assumed the risk is to be judged a usurer. Barred from the form of a loan, merchants split into two roads. One was the commenda, sharing profit. The other separated the money from the risk — carry the risk alone, and take a payment for it. That is insurance. A regulation made someone design a new product. The document most often cited is dated 23 October 1347, for the Genoese ship Santa Clara, though a Pisan contract of 1343 is also claimed and some cite a surviving Pisan policy of 1384 as the oldest physical one: there are several candidates for «first». What changed next was the place. Around 1686, sailors and merchants gathered at Edward Lloyd's coffee house on Tower Street in London. Where the news of ships collected, the people who would carry the risk of ships collected too. Lloyd's is not a company but a market — the underwriters are individuals, and for a long time their liability was unlimited. The weight of that design showed three centuries later: asbestos and other long-tail claims produced losses between 1988 and 1992 under which about fifteen hundred of some thirty-four thousand members went bankrupt. And the last thing to change was how the price is set. In 1693 Edmond Halley — of the comet — built a life table from the mortality records of Breslau and calculated what an annuity was worth. A price that had been a matter of judgement became a matter of arithmetic. The Equitable, founded in 1762, was the first to set premiums by age on that arithmetic.
The myth, corrected
The Code of Hammurabi says a debt is void if the ship sinks
It is often repeated, but the clause cannot be found. It is not in §§100–107, which govern loans between merchants and their agents, nor in §§234–240, on the liability of shipwrights and boatmen — the latter impose an obligation to compensate, if anything. That Mesopotamia had a practice by which a debt died when a caravan was robbed is itself attested on tablets of the period. The practice existed; that it was written in the code cannot be confirmed. Somewhere along the way, the gap closed itself.