British Marine can trace its roots back to circa 1866 although it was first formally registered on 29th February 1876 as the umbrella organisation for seven mutual Hull insurance clubs managed by Edward Reid Evans. It was limited by guarantee to £5 and there were seven subscribers, who formed the first committee of the Association.

The mutual clubs under British Marine initially offered hull insurance to owners of steamers and sailing ships. Protection for "loss of life, improper navigation, one fourth collision costs and damage to docks and piers" was added in 1878, and Indemnity cover was introduced in 1886. By 1894 British Marine offered four main classes of insurance:

• Hull;
• Protection & Indemnity;
• Defence;
• Collision;

which is broadly the insurance offered by British Marine today.

In 1917 British Marine made an arrangement with the British Government to offer War Risk insurance to British flag ships. In the period to the end of the First World War, the Association recorded 13 losses and three damages of entered ships. The result was that a surplus was created, an unexpected state of affairs after the heavy losses the British fleet suffered during the first part of the war. Consequently, the Association's committee decided to refund the surplus to the members. In essence, War Risk insurance is still available, although its provisions were absorbed into the Hull & Machinery rules in 1990.

The boom experienced by the British coastal fleet after the first World War soon collapsed with freight volumes falling by 45%, and many owners laid up their tonnage or sold out. The effect was quite dramatic on the number of ships entered in British Marine for Hull & Machinery insurance, as this Club drew the bulk of its members from the coastal trade. Hull & Machinery insurance was therefore discontinued following a special resolution passed by the members in May 1925, and remained closed until reintroduced on 1st January 1971.

From its inception British Marine has catered to the needs of small to medium sized ships and fishing vessels. Indeed, such was British Marine's expertise in insuring smaller ships that for long periods the Club provided re-insurance to such ships entered with both British and French mutuals. As smaller ships have become increasingly more sophisticated to meet the growing demands from their trades British Marine's expertise in servicing this sector has increased. Because of its strong focus on smaller ships British Marine has always stood outside the International Group of P&I Clubs, and its predecessor the London Group, as these pools were created to reduce exposure to claims of a magnitude that would under normal circumstances only be incurred by larger ships. Instead of participating in the pooling arrangements with other Clubs, British Marine has purchased reinsurance to protect against high-value claims.

Throughout its history British Marine's premium policy has been characterised by fairness. Under the original rules every ship paid a relatively small advance or first call, whereas the supplementary call was the multiple of the claims incurred by each ship. A ship with no claims paid no supplementary call. A ship with a big claim paid a big supplementary call. This rule was changed in the 1970's to the effect that a member's past claims record was taken into account in setting his premium. In this way the member was judged against the average underwriting cost of the membership as a whole.

A major milestone in British Marine's history was reached when the Associations under management were demutualised in February 2000. Through the demutualisation, British Marine became the first marine insurer to offer both Hull & Machinery and Protection and Indemnity insurance on a fixed price basis, combined with the high standards of service that customers expect from a mutual association. The transition from a mutual association to a demutualised, privately held, fixed premium insurer was completed by the acquisition of British Marine by QBE at the end of 2005.