A conundrum

We suppose ourselves to be back in the days of the slave trade, when enterprising ship owners used to buy slaves in Africa and ship them across the Atlantic to be sold on in the New World. Days when the passage across the Atlantic was very dangerous and many ships did not make it.

An insurance industry grew up to spread out the risks, to spread out the costs of these losses. Nobody thought that fully comprehensive insurance was a good idea as that discouraged proper management of the ships and encouraged fraud - so there were inclusions and exclusions.

The custom among Bristol insurers was to specifically include losses due to action by pirates armed with projectile weapons. Ship owners were expected to be able to deal with other sorts of pirates. And they specifically excluded losses due to storms and monsters of the deep, monsters like whales and giant squids. Ships were expected to be able to cope with this sort of thing. And it all went along swimmingly and everyone, that is to say the ship owners and the insurers, did very nicely. While the cargoes, that is to say the slaves, were pretty much invisible from Bristol. Out of sight, out of mind. The slumbers of delicate maidens whose extravagant lifestyles were so supported were not disturbed.

Then, all of a sudden, some intelligent monsters of the deep appeared on the scene. Monsters who lived in palaces under the sea and made their living by attacking ships crossing the Atlantic. Monsters who looked a bit like mermen and mermaids and who were armed with monstrous catapults. So here we had a risk which was both clearly included and clearly excluded from all the many insurance policies which had been written. Written in the sure and certain knowledge that there were no intelligent monsters of the deep.

What was to be done? Under English Common Law, the usual form was to interpret the words of the policies in a very literal way. Which meant that expensive lawyers made a great deal of money by spinning out arguments about whether these mermen and mermaids were really monsters of the deep and whether their catapults really counted as projectile weapons. From where I associate to the rancorous debates among the theologians of old about the precise nature of the Trinity, matters which were just as important in their day as the Atlantic carrying trade was in this. In fact, so much money that lots of ship owners and lots of insurers went out of business. A result of sorts for the slaves.

Whereas in Sweden they took a more pragmatic approach. The Swedish Parliament simply passed a retroactive law which shared out the costs of this unforeseen risk in a fair way, with the monarch, the tax payers at large, the ship owners and the ship insurers all taking their fair share of the hit. And the expensive lawyers took reasonable fees for devising new words for new insurance policies.