Lloyd’s of London Insurance company
Lloyd’s of London is one of the world’s most established and oldest international insurance and reinsurance markets. And also transacting business worth billions of pounds in premiums every year. It is not an insurance company but a competitive market also. As well as individual underwriters accept risks on behalf of some 164 syndicates of individual and corporate members. Lloyd’s is a broker market. Always business comes into the market through Lloyd’s brokers who bring business from clients and other brokers and intermediaries.
History of Lloyd’s of London
Sometimes the world’s most famous insurance group, Lloyd’s of London is a uniquely organized insurance market. It does not sell insurance perse. But regulates a market through which insurance contracts are transacted. The organization is a society of individuals–and, since 1994, corporations–that accept liability for claims under insurances accepted on their behalf.
Business can be placed only by approved insurance brokers. One person, the active underwriter, is empowered to accept insurances on behalf of the syndicate members. Every syndicate has a managing agency which appoints the active underwriter. The syndicate varies membership from year to year. All member’s affairs at Lloyd’s are managed by a member’s agent.
Over the course of its more than three centuries in business. This unique group has brokered policies for the routine–it is Great Britain’s leading automotive insurer & mdash well as the weird. Unusual contracts written at Lloyd’s have included: a food critic who insured his taste buds for £250,000; a comedy troupe that took out a policy to cover the risk that an audience might die laughing; and rock star Bruce Springsteen, who insured his voice for £3.5 million. Though the group’s most famous claim is probably the sinking of the Titanic in 1912.
Prompted by aggregate losses of more than £7.9 billion from 1988 through 1992. Lloyd’s was compelled to reform some long-held precepts. For over three hundred years, individual underwriting members, called Names, accepted unlimited personal liability for the policies they signed. Facing a lawsuit that eventually cost the group more than £3 billion, Lloyd’s formally inaugurated limited individual liability in 1993. That year’s creation of Equitas, a separate reinsurer to assume all of Lloyd’s pre-1993 liabilities, appeared. The market achieved a total net income of over £2 billion in 1993 and 1994.
Origins As 17th-Century Coffeehouse
In 1680, Edward Lloyd opened a coffeehouse in Tower Street, London, near the docks. He sought to attract a clientele of persons connected with shipping and in particular marine underwriters, those willing to transact marine insurance. In 1691 his coffeehouse moved to Lombard Street. Lloyd provided shipping intelligence. The business was carried on by a succession of masters.
At the early 18th century Lloyd’s became the main, though not the only, place where marine underwriters congregated. The Bubble Act of 1720 gave two newly formed corporations. The London Assurance and The Royal Exchange Assurance, the exclusive right to transact marine insurance as corporations. But expressly allowed individual private underwriters to continue operating. The two corporations exercised the utmost caution and took only a fraction of the growing market, leaving scope for private underwriters. Some of these were also willing to effect gambling insurances. Insurances on ships and cargoes were forbidden by an Act of 1745. But persisted on lives and specific events.
In 1769 some underwriters who disapproved of gambling insurances broke away. They persuaded Lloyd’s waiter, Thomas Fielding, to open a New Lloyd’s Coffee House which, in five years. The new Lloyd’s became cramped. At 1771 nine merchants, underwriters, and brokers formed a committee which took over the premises and appointed two masters to run them. Lloyd’s moved into the Royal Exchange in 1773. By the Life Assurance Act, Parliament prohibited gambling insurance on lives. vindicating the stand of those who had reorganized Lloyd’s.
In 1779 Lloyd’s had only 179 subscribers. These enjoyed the sole right of entry to the underwriting room at Lloyd’s. The wars with France brought great prosperity for marine insurers, among them John Julius Angerstein, an underwriter and broker who served as chairman. At the height of the wars, the number of subscribers rose to over 2,000.
Lloyd’s of London Membership Declines in Early 19th Century
British entrepreneurs chafed in the law against new marine insurance companies. At 1824 the Bubble Act was at last repealed. But peace had signalled a decline in marine insurance. The number of subscribers fell from 2,150 in 1814 to 953 in 1843. At 1844, the committee of Lloyd’s abolished the office of the masters and assumed full responsibility. Through its secretary, for administering the market.