From Industrial to Legal Standardization, 1871-1914

Transnational Insurance Law and the Great San Francisco Earthquake


At the end of the 19th century, internationalisation and standardisation fundamentally changed business law. More and more industries such as insurance, transport, wholesale and finance used standard contracts and clauses for international transactions. An impressive example of this development was the reaction of the insurance industry to the earthquake and inflagration of San Francisco in 1906. At once, a global discourse on the economic, technical and legal consequences arose; in the meantime, a small group of powerful reinsurance managers developed a strict exclusionary clause intended for worldwide application. Fire insurers in many countries adopted this "earthquake clause", while others refused it. Germany, California and Italy - where the earthquake of Messina in 1908 led to a legal turn - are paradigmatic examples of these reactions. Beyond this case study, the author discusses the novel phenomenon of international standard contracts and clauses from a theoretical perspective.

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Tilmann J. Röder wrote his PhD thesis at the Max Planck Institute for European Legal History in Frankfurt am Main. He has been a senior research fellow at the Max Planck Institute for Comparative Public Law and International Law in Heidelberg since 2006 and is responsible for rule of law projects in Islamic countries including Afghanistan, Pakistan, Iraq, and Egypt. He recently publishedConstitutionalism in Islamic Countries: Between Upheaval and Continuit (with Rainer Grote, eds., OUP 2011),
'This is a pioneering study that can be recommended to anyone interested in the history of international business and the contracts and legal standards that came to underpin it.'
Reviewed for EH.Net by Robin Pearson, Department of History, University of Hull (December 2012).
List of Tables
List of Abbreviations
List of References and Sources

The Subject and Focus of the Present Study
State of Research and Sources

Chapter One
Standard Contract Terms in National and International Trade
1.1. Weapons, Contracts and the Dominance of Standardisation
1.2. Contract Terms and Conditions in Individual Countries
1.2.1. The Beginnings of Standardisation in Technology and Law (ca. 1770-1830)
1.2.2. Intensification of the Mass Phenomenon (approximately 1830-1870)
1.2.3. Institutionalisation and State Control (ca. 1870-1914)
1.3. Contract Terms in Worldwide Commerce
1.3.1. The Internationalisation of Business (1871-1914)
1.3.2. Adjustment of Contract Bases to Economic Internationalisation

Chapter Two
The Earthquake Clause in Fire Insurance Contracts: The Development of a Standard (1906-1907)
2.1. The Aftermath of an Earthquake
2.1.1. A Paradise for Fire Insurers
2.1.2. ‘San Francisco is gone’.
2.1.3. The Worldwide Earthquake in the Insurance Business
2.1.4. The Beginning of Damage Settlements
2.1.5. Points of Conflict in Material Law Pure Tremor Damage Damage Equally Caused by the Collapse of Buildings and Fire Pure Fire Damages Damages from Explosions, Blasting, and Sundry Causes
2.1.6. Attempts to Reach Out-of-Court Settlements Insurers Seeking Alliances The Escalation of the Conflicts over Damages The Preparation for Juridical Disputes
2.1.7. Court Cases and Settlements Law of Evidence and Levels of Review: Steps in Favour of the Injured Parties Cases Involving Damages Caused by Partial Building Collapse Cases involving Fire Damage Court Cases and Settlements Abroad
2.1.8. The Earthquake Balance Sheet: The View from the International Insurance Business
2.2. The Reactions of the Insurance Industry
2.2.1. The San Francisco Disaster: Difference in the Perception of the Events
2.2.2. Danger or Risk? Differences in the Perception of the Possible
2.2.3. San Francisco, Valparaiso, Kingston: The Global Dimension
2.2.4. Radical Thought Experiments
2.2.5. The Initial Consequences in the Crisis Regions
2.2.6. Additional Premiums or an Earthquake Clause?
2.3. The Motors of an International Standardisation of the Earthquake Clause
2.3.1. The Project of the Four Reinsurers Origin of the ‘Earthquake Commission’ Activation of the Global Networks A Stock-Taking at the End of 1906: International Regulation Pluralism Reinsurers as Legal Comparatists The Perfect Earthquake Clause
2.3.2. Opposition in England and the United States The United States of America: The Power of Politics and Society Great Britain: The Power of the Market
2.3.3. Adherence to the Concept of the Earthquake Clause
2.4. A New Standard for the World: Result of the Second Part

Chapter Three
The Earthquake Clause in Fire Insurance Contracts
The Limits of International Standardisation (1907-1912)
3.1. The Introduction of Unitary Earthquake Clauses
3.1.1. Basic Features of National Developments Spain and Portugal France and Belgium Germany and Austria-Hungary First Results
3.1.2. Germany: A Broad Consensus on the Earthquake Question The Fire Insurance Industry at the Beginning of the Twentieth Century ‘San Francisco’ Reaches Germany Contemporary Estimates of the Earthquake-Fire Danger in Germany The Earthquake Regulations at the Time of the San Francisco Disaster The German Discourse of the Earthquake Regulations in the AVB and Law International Standardisation through Legislation (November 1907-May 1908) A New Earthquake Clause in the New AVB (1908-1909) No Business Abroad without an Earthquake Clause? Adoption of the Earthquake Clause by Public Institutions
3.1.3. Provisional Conclusion
3.2. Rejection of the Earthquake Clause and its Alternatives
3.2.1. The Outlines of National Developments Great Britain and the Netherlands The United States of America and Canada Initial Results
3.2.2. California: Standard Policies as the Threshold for International Standardisation? The Insurance Industry at the Turn of the Twentieth Century Contemporary Estimates of the Earthquake-Fire Danger in California The Earthquake Regulations at the Time of the San Francisco Catastrophe ‘Drastic Insurance Legislation expected’ (1906) The Development and Failure of the First Standard Policy Draft (1907) Reform of the Law of Civil Procedure and of the Law of Supervision (1907) The Market Decides it All: The Insurers’ Discussion and Removal of the Earthquake Clauses (1907) The Development and Success of the Second Standard Policy Draft (1907-1909) Reactions from the Insurance Industry and the Public
3.2.3. Preliminary Results
3.3. No Consensus on the Earthquake Clause
3.3.1. Character of National Developments Switzerland Scandinavia, Russia and Italy Initial Results
3.3.2. Italy: Discourse Control instead of Clause Reform The Fire Insurance Industry at the Beginning of the Twentieth Century Will ‘San Francisco’ Come to Italy? Contemporary Assessments of the Earthquake-Fire Danger in Italy The Earthquake Regulations at the Time of the San Francisco Catastrophe Recommendation of the Reinsurers on Clause Reform (July 1907) No Reactions (1907-1908) An Earthquake and its Consequences: ‘Messina non c’era più’ Reinterpretation of the Earthquake Clause in Court (1909-1910)
3.4. The Reasons for Success and Failure: Results of the Third Part

Chapter Four
Summary: Paradigmatic Changes in the Law
4.1. New Regulatory Requirements
4.2. New Structures of the Formation of Norms
4.2.1. Scope, Conditions and Limits of the Standard Form Practice
4.2.2. Standardisation of the Contractual Bases as a Novel Organisational Strategy
4.3. Tendencies in the Replacement of State Law
4.3.1. Development of Law between Autonomy and the State’s Claim to Regulation
4.3.2. The Genesis of a Transnational Legal System?


Readers interested in the legal history of the industrial revolution, insurance history, lex mercatoria, risk and caastrophe studies, and particpuarly the consequences of the earthquakes of San Francisco (1906) and Messina (1908).
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