Early methods

Early methods

Merchants have sought methods to minimize risks since early times. Pictured, Governors of the Wine Merchant’s Guild by Ferdinand Bol, c. 1680.
Methods for transferring or distributing risk were practiced by Babylonian, Chinese and Indian traders as long ago as the 3rd and 2nd millennia BC, respectively.[1][2] Chinese merchants travelling treacherous river rapids would redistribute their wares across m

any vessels to limit the loss due to any single vessel’s capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen, or lost at sea.[citation needed]

Circa 800 BC, the inhabitants of Rhodes created the “general average”. When several merchants had cargo on the same ship if during the voyage the cargo of one merchant was thrown overboard to save the ship during a storm, the rest of the merchants were required to reimburse the merchant, whose goods were jettisoned, from the proceeds of their saved cargo.[3] Concepts of insurance has been also found in 3rd century BCE Hindu scriptures such as Dharmasastra, Arthashastra and Manusmriti.[4]