Cargo Insurance: An Ancient Yet Essential Practice

The importance of insuring goods during transport has been recognized for millennia. As far back as the ancient era following the invention of writing, merchants sought protection against loss—especially during long and dangerous trade routes.

Origins: Babylon and the Code of Hammurabi

The first known insurance policy, discovered in ancient Babylon (modern-day Iraq), dates back to around 500 BCE.
Under King Hammurabi’s laws, merchants could borrow money to fund their shipments. If the shipment was stolen en route, the merchant was not obligated to repay the loan.
However, if the goods arrived safely, the borrowed amount plus interest (a premium) was repaid—an early form of transport insurance.

Insurance Contracts in Renaissance Italy

By the late 15th century, international trade was booming, and longer trade routes increased financial risk.
In Italy, the first formal marine insurance contracts were created, covering shipwrecks, fires, and cargo losses.

The Dutch East India Company (VOC) also operated as a de facto insurance mechanism. Ship investments were pooled among merchants, distributing risks collectively—a model that boosted Dutch economic prosperity.

First Official Insurance Company in the Netherlands

In 1720, the first Dutch insurance company was founded:
"De Assurantie-, Disconteer- en Beleeningmaatschappij der Stad Rotterdam", later known as R. Mees & Zonen.
Throughout the 19th and 20th centuries, mergers and the growth of national insurance firms expanded the sector significantly.

Risk Transfer Through Incoterms

In international trade, the transfer of risk from seller to buyer is defined by the Incoterm agreed upon in the sales contract.

• The delivery point marks the transfer of risk

• The Incoterm does not apply between the seller and freight carrier, only between buyer and seller

• The transport agreement between the seller and carrier separately defines liability for transit risks

Modern Cargo Insurance: From Warehouse to Warehouse

Due to risks like damage, theft, or loading/unloading incidents, cargo insurance is crucial.
A typical cargo insurance policy:

• Covers the shipment "warehouse to warehouse"

• Includes intra-facility damages (e.g., handling at storage sites)

• Is often structured under the “Proposition-to-Proposition clause”

This ensures full protection from origin to final destination—providing peace of mind for cargo owners in today’s complex logistics landscape.