Marine Insurance was the earliest well-developed kind of insurance in Italian cities in the fourteenth century and spread to northern Europe which covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination. Premiums varied depending upon the variable risk from seasons and pirates. In the mid eighteenth century the establishment of Lloyd’s of London, competitor insurance companies and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice.
In the 19th century Lloyds and a group of London company insurers called the Institute of London Underwriters standardized clauses for the use of marine insurance and these have been maintained since then. Hence these are known as the Institute Clauses because the Institute covered the cost of their publication. Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a considerable freedom to contract between themselves. It traditionally formed the majority of business underwritten at Lloyds. Lloyd's and the Institute of London Underwriters (as mentioned the group of London company insurers) developed between them standardized clauses for the use of marine insurance, and these have been maintained since now. These are known as the Institute Clauses because the Institute covered the cost of their publication.