Question

Scholars of economic history have traditionally attributed the rapid expansion of Mediterranean maritime trade during the fifteenth century to the formalization of maritime insurance contracts in Venetian and Genoese courts. According to this consensus, written contracts mitigated financial risk, thereby encouraging risk-averse merchants to finance long-distance voyages. Recently, however, institutional economist Elena Rossi has challenged this view, arguing that legal insurance contracts were largely ceremonial, as court enforcement mechanisms were too weak to compel payouts across international jurisdictions. Instead, Rossi asserts that informal merchant networks based on kinship and reciprocal reputation handled the true burden of risk mitigation.

While Rossi’s critique rightly highlights the oversight of traditional historians regarding informal enforcement mechanisms, her total dismissal of formal contracts is ultimately unconvincing. Empirical analysis of Venetian notarized records from 1420 to 1460 reveals a consistent correlation between the standardized drafting of insurance clauses and increased capital allocation for high-risk routes, such as the Levantine trade. Furthermore, even when cross-border litigation proved ineffective, local merchant guilds systematically sanctioned contract breakers by revoking commercial licenses—a formal enforcement mechanism that Rossi overlooks. Thus, while informal trust networks certainly facilitated commercial cooperation, formal insurance instruments provided a vital structural framework without which Mediterranean commercial scaling would have remained severely constrained.

Which of the following best characterizes the author’s stance toward Elena Rossi’s perspective on Renaissance maritime insurance contracts?