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There has been a recent shift in the historiography of the modern British economy towards an emphasis on the success of the service sector. This article examines one criterion of success, namely innovation, in British insurance between 1700 and 1914. Factors determining innovation are surveyed and comparisons drawn with European insurance. The relevance of existing models of industrial innovation is challenged and a new model is constructed for insurance. This model suggests that insurance innovation ran broadly counter-cyclical to innovation in industry during this period, and was relatively undynamic. The article concludes by speculating about the relationship between industrial growth, liquidity constraints, and innovation in insurance.