Published by EH.NET (February 2006)
Robin Pearson, Insuring the Industrial Revolution: Fire Insurance in Great Britain, 1700-1850. Aldershot, UK: Ashgate, 2004. xiii + 434 pp. $100 (hardcover), ISBN: 0-7546-3363-2.
Reviewed by Mark Tebeau, Department of History, Cleveland State University.
Despite its rather obvious importance to modern economic development, the history of fire and property insurance has been largely neglected. Until now that is. Robin Pearson’s exhaustively researched and meticulously argued study, Insuring the Industrial Revolution: Fire Insurance in Great Britain, 1700-1850, offers the definitive history of the British fire insurance industry through the middle of the nineteenth century. Even more critically, Pearson establishes just how integral property insurance was to the industrial revolution. Although Pearson is careful to note that fire insurance did not determine the economic development (and, in fact, was often shaped by it), he shows how fire insurance developed in support of the broader economy, was often at the cutting edge of industrial business expansion, and fostered further economic growth.
At its broadest level, Pearson’s argument demonstrates how fire insurance was integral to an industrializing society. Widely available in London by the 1850s and easily acquired in the provinces, fire insurance reduced the uncertainty associated with the hazard of fire — at least in economic terms for businesses and the middle-class for whom insurance policies would have been most affordable. On mechanistic grounds, the availability of relatively cheap and stable forms of insurance offered security to property owners — residential, mercantile, or manufacturing. By indemnifying policy holders from significant property losses associated with fires, insurance provided an institutional incentive for accumulating wealth in the form of material items and investment. In short, it minimized the risks associated with aggressive economic development. At the same time, fire insurance was critical to the financing of the infrastructure, thus critical to industrial development. Firms provided capital for a variety of public improvement projects as well as for private economic ventures. Fire insurance firms also depended on and strengthened the institutional networks on which economic development depended. Thus, fire insurance became integral to industrial activity, “forming part of the feedback mechanism by which trust and confidence multiplied within business communities” (368).
Pearson’s research is exhaustive and his arguments are qualified with exceptional care — so much so, that it is difficult to offer a full accounting in a brief review. Insuring the Industrial Revolution begins with an initial chapter that outlines the overall development of the industry in a series of detailed and well-constructed tables. After that, the story is organized into two parts. The first section offers a chronological portrait of the industry. Pearson essentially divides his narrative into three periods of analysis, bounded by major political and economic developments, as well as shifting trends in the industry itself: the period from 1720 to 1782, the era from 1782 to 1815, and finally the years between 1815 and 1850. In these chapters, Pearson places the industry into the historiography of the British industrial revolution. Throughout, he takes an approach that explores the entirety of the market in insurance. He explores the vagaries of fire insurance firms in the provincial areas as well as in larger cities. He meticulously compiles and analyzes a mountain of data, synthesized into over fifty figures and tables — an impressive and (no-doubt) time-consuming contribution in their own right.
The second section of Insuring the Industrial Revolution examines the industry’s internal organization in a thematic explication of its central elements. It explores four broad topical areas: the process of company foundation and the social, political, and economic networks behind this process; the marketing of insurance and the development of networks of agents to manage the insurance transactions; the core practice of underwriting and its change over time, including the challenges of assessing risk; and the trends in how companies invested their capital and understood that capital in terms of their broader portfolio of risk, as well as how the insurance industry operated as an investment from the perspective of individual investors.
Although well written, it is easy to get lost in the details of this story. Pearson lovingly and painstakingly recounts an exhaustive list of similarities and differences in the industry, paying special attention to the geographic differences between Britain’s various provincial areas, and between the provinces and the major metropolitan centers. Sometimes frustrating from the perspective of a reader, this level of specificity nonetheless advances the larger purpose of the book, which is to recognize that subtle — and sometimes contradictory — manner in which the industry developed. Nor is this precisely a critique of Pearson’s skill as a writer. To the contrary, Pearson shows deft authorial voice in juggling such a complex story. For example, both the first and second sections of the narrative cover the same material, but there is little sense of redundancy here. In fact, Pearson’s examination of the various elements of the insurance industry is exceptionally well constructed. These chapters are a primer on the basics of insurance, introducing issues that did not disappear in 1850 but would continue to haunt insurers well into the twentieth century.
Insuring the Industrial Revolution will become a touchstone for future research on the history of fire and property insurance in part because of the connections that Pearson makes between industrialization and fire insurance. More importantly, though, this work also lays out an agenda for future research into the industry. Pearson provides a compelling argument as to why we should seek to better understand the connections between economic development and property insurance. He suggests, too, that we must look at the subject globally, developing rich cases studies that explore the history of insurance in Europe, the United States, and other places. And, through the example of what he has done with the British fire insurance industry, he demonstrates the benefits of weaving such case studies into the comparative history of property insurance. Not only will we get a better sense of the particulars of the industry, but we will also be able to better understand how the expansion of global economic connections may have fostered the stability of the insurance industry by creating a market in reinsurance and dispersing risk more widely. And, finally, we must keep in mind that the history of the fire insurance industry does not end in 1850 with the advent of more sophisticated tools for understanding risk. Rather, the industry’s continued evolution occurs in a direct relation to broader economic, political, and societal changes, not the least of which is that the danger of fire itself will continue to shift in modernizing societies.
Indeed, if Insuring the Industrial Revolution shows how the study of fire insurance contributes to broader debates in economic history, it also suggests implicitly that we place the study of fire insurance into a wider historical lens. Unfortunately, Pearson is a bit too guarded about such possibilities, arguing that “establishing an evidential link between the expansion of insurance and broad attitudinal changes in a society is extremely difficult” (368). However, I believe that we should nonetheless push the boundaries here and broaden the frame. We should identify ways in which the expansion of fire (and property) insurance was related to changes in the social, cultural, and political realms. I agree that such connections are difficult to prove, but as I suggest in my own work on urban fire risk, the work of insurers had tremendous implications for society. These include encouraging consumerism and the consumer safety movement; fire underwriters’ activities are clearly linked to shifting perceptions of societal danger; and, at the very least, insurers’ visions of the world frequently have been built into the material landscapes of ordinary life.
Insuring the Industrial Revolution is a singular achievement. Robin Pearson demonstrates that fire insurance played a consequential, if sometimes ambivalent, role in the industrial revolution. He also provides a roadmap that future scholars in this area will follow when constructing their own studies of the history of fire insurance. I hope that this fine study garners the wide audience it deserves.
Mark Tebeau is author of Eating Smoke: Fire in Urban America, 1800-1950 (Johns Hopkins University Press: 2003).