insurance > governance

I say this because insurance has always been the most effective form of governance. Going back to Lloyd’s coffee house in London where underwriters met to insure long, expensive trips of spice from far-off lands, there was no way to predict loss due to storms, piracy, etc. The only way was to pool like risk together and charge a premium to underwrite a loss of one of its insured pool members.

Being part of a pool, and being covered for a potential loss meant that you had to abide by the requirements of the pool: a seaworthy ship, a capable crew, and a route that was reasonably well-known. Deviate from any of those requirements was still your prerogative but you would no longer be covered. A worthy incentive to comply, nothing to do with power or coercion. This is good governance brought on by insurance.