In April 1906, a massive earthquake hit San Francisco. Buildings fell, gas mains burst and ignited, fires ravaged the city for days, and many buildings still standing burned to the ground. When city property owners filed claims with their fire insurers, some insurers, fearing insolvency, resisted. They invoked certain standard policy terms: a fallen-buildings clause, which excluded fire losses to a building if that building fell not because of fire; and an earthquake clause, which generally excluded damages caused by earthquakes. Policyholders and their allies fought back, often successfully, by arguing about those clauses' ambiguities: Did not such clauses exclude fire losses directly, but not indirectly, caused by an earthquake? And did not the insurer, not the policyholder, bear the burden of proving what the clause required?

In this book, Röder shows how, with the San Francisco experience in mind, the managers of four fire reinsurance companies joined forces in June 1906 to draft, circulate, and encourage adoption of a standard earthquake clause into policies sold domestically and abroad by fire insurers based in Europe. This standard clause, the fire-insurers hoped, would unambiguously exclude both direct and indirect fire damage caused by earthquake and would burden the policyholder, not the insurer, with proving that this clause did not apply. If widely adopted, the fire-insurers believed, they and their fire-insurer counterparties would be far less vulnerable when the next great earthquake came.

Röder is a senior research fellow at the Max Planck Institute for Comparative Public Law and International Law. The book is an English translation of Röder's dissertation, published in German in 2006, now updated to include “the literature available by September 2011” (xvii). Chapters 1 and 4 frame the rise and spread of the fire reinsurers' earthquake clause as a case study of the rise and spread of standard terms in international business contracts before the First World War. Within this frame, the book's middle chapters display the substantial fruits of Röder's primary sources. Chapter 2 describes the fire insurers' experience with the San Francisco earthquake aftermath and the origins of the fire reinsurers' earthquake clause. Chapter 3 compares, by country, how fire insurers reacted to that clause. These chapters show well, and with remarkable breadth, how the San Francisco earthquake affected fire insurer policies and practices worldwide, as well as the significant cross-country differences in fire insurance market structure at the turn of the twentieth century.

How well the study fits its frame—the spread of standard terms in international business contracts—turns largely on the cross-country comparisons in Chapter 3. In some countries, the fire insurers adopted versions of the reinsurers' earthquake clause as a standard policy term (Spain, Portugal, France, Belgium, Germany, Austria-Hungary). In others, they rejected it (Great Britain, Netherlands). In still others, the insurer response is unclear (Switzerland, Denmark, Norway, Sweden, Russia, Italy).

By comparing insurer reactions by country, Röder infers several influences favoring standard earthquake clause adoption (286): insurer perception that they already covered enough risk of earthquake-induced fire damage such that an earthquake could endanger company solvency; insurer doubts about their ability to calculate and price earthquake risk accurately; that general insurance law reforms were already pending and imminent; and how much insurers depended on the fire reinsurers to cover their portfolios. Röder also finds two barriers: fear of losing market share to rival companies who were willing to cover fire risk from earthquakes, and market domination by public law insurance institutions or mutual societies.

These causal inferences vary in strength. Consider Germany, Italy, and California, the cases on which Röder spends the most time. For Germany, this is time well spent. The German experience strongly supports the idea that regulatory structure mattered, as did already-imminent insurance law reform. Italy and California, however, reveal far less. In Italy, fire insurers responded to the reinsurers with apparent disinterest, but Röder can only speculate why, because “not a trace of a discussion or any resolutions has survived” (262). When, in December 1908, an earthquake hit near Messino and Reggio, and fires followed, the Italian courts ultimately read the earthquake clauses in existing fire insurance policies in a way similar to the fire reinsurers' desired reading of their standard clause. This is interesting, but, given his frame, somewhat tangential. Similarly, the California experience, although interesting (211–40), seems peripheral, because the fire reinsurers never really pressed domestic fire insurers in North America to adopt their standard earthquake clause in the first place (209, 235).

Caveats aside, for those interested in early twentieth century insurance and commercial law and legal practice, this book is well worth reading.