HOME

TheInfoList



OR:

Lloyd's of London, generally known simply as Lloyd's, is an
insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
and
reinsurance Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insu ...
market located in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
, England. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body governed by the Lloyd's Act 1871 and subsequent
Acts of Parliament Acts of Parliament, sometimes referred to as primary legislation, are texts of law passed by the legislative body of a jurisdiction (often a parliament or council). In most countries with a parliamentary system of government, acts of parliament ...
. It operates as a partially-mutualised marketplace within which multiple financial backers, grouped in
syndicate A syndicate is a self-organizing group of individuals, companies, corporations or entities formed to transact some specific business, to pursue or promote a shared interest. Etymology The word ''syndicate'' comes from the French language, Frenc ...
s, come together to pool and spread
risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...
. These
underwriters Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabilit ...
, or "members", are a collection of both
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
s and private individuals, the latter being traditionally known as "Names". The business underwritten at Lloyd's is predominantly general insurance and reinsurance, although a small number of syndicates write term
life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...
. The market has its roots in
marine insurance Marine insurance covers the physical loss or damage of ships, cargo, terminals, and any transport by which the property is transferred, acquired, or held between the points of origin and the final destination. Cargo insurance is the sub-branch o ...
and was founded by Edward Lloyd at his coffee house on Tower Street in 1688. Today, it has a dedicated building on Lime Street which is Grade I
listed Listed may refer to: * Listed, Bornholm, a fishing village on the Danish island of Bornholm * Listed (MMM program), a television show on MuchMoreMusic * Endangered species in biology * Listed building, in architecture, designation of a historicall ...
. Traditionally business is transacted at each syndicate's "box" in the underwriting "Room" within this building, with the policy document being known as a "slip", but in more recent years it has become increasingly common for business to be conducted outside of the Lloyd's building itself, including remotely. The market's motto is ''Fidentia'',
Latin Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) around present-day Rome, but through the power of the ...
for "confidence", and it is closely associated with the Latin phrase ''uberrima fides'', or "utmost good faith", representing the relationship between underwriters and brokers. Having survived multiple scandals and significant challenges through the second half of the 20th century, most notably the
asbestosis Asbestosis is long-term inflammation and pulmonary fibrosis, scarring of the human lung, lungs due to asbestos, asbestos fibers. Symptoms may include shortness of breath, cough, wheezing, and chest pain, chest tightness. Complications may include ...
affair, Lloyd's today promotes its strong financial "chain of security" available to promptly pay all valid claims. This chain consists of £55.2 billion of syndicate-level assets, £31bn of members' "funds at Lloyd's" and £4.9bn in a third mutual link which includes the "Central Fund" and which is under the control of the Council of Lloyd's. In 2021 there were 75 syndicates managed by 50 "managing agencies" that collectively wrote £39.2bn of gross premiums on risks placed by 388 registered brokers. Around half of Lloyd's premiums emanate from North America and around one-quarter from Europe. Direct insurance represented 63 per cent of the premiums, mostly covering
property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
and casualty ( liability), while the remaining 37 per cent was reinsurance.


History


17th–19th centuries: Formation and first Lloyd's Act

The market began in
Lloyd's Coffee House A 19th-century drawing of Lloyd's Coffee House Lloyd's Coffee House was a significant meeting place in London in the 17th and 18th centuries. It was opened by Edward Lloyd (c. 1648 – 15 February 1713) on Tower Street in 1686. The establis ...
, owned by Edward Lloyd, on Tower Street in the
City of London The City of London is a city, ceremonial county and local government district that contains the historic centre and constitutes, alongside Canary Wharf, the primary central business district (CBD) of London. It constituted most of London fr ...
. The first reference to it can be traced to the ''
London Gazette London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
'' in 1688. The establishment was a popular place for sailors, merchants, and ship-owners, and Lloyd catered to them with reliable shipping news. The coffee house soon became recognised as an ideal place for obtaining marine insurance. The shop evolved into a meeting place for people of all types of maritime occupations. They would make bets on what ships would make it back to port. Soon, the captains on ships that were suggested to never come back were making bets on other ships a making sure that their ships never came back. It was the start of insurance. During this time, it was a hotspot also frequented by mariners involved in the
slave trade Slavery and enslavement are both the state and the condition of being a slave—someone forbidden to quit one's service for an enslaver, and who is treated by the enslaver as property. Slavery typically involves slaves being made to perf ...
. Historian
Eric Williams Eric Eustace Williams (25 September 1911 – 29 March 1981) was a Trinidad and Tobago politician who is regarded by some as the "Father of the Nation", having led the then British Trinidad and Tobago, British Colony of Trinidad and Tobago to m ...
noted that "Lloyd's, like other insurance companies, insured slaves and
slave ship Slave ships were large cargo ships specially built or converted from the 17th to the 19th century for transporting slaves. Such ships were also known as "Guineamen" because the trade involved human trafficking to and from the Guinea coast ...
s, and was vitally interested in legal decisions as to what constituted 'natural death' and 'perils of the sea'." Lloyd's obtained a monopoly on maritime insurance related to the slave trade and maintained it until the
abolition of the slave trade Abolitionism, or the abolitionist movement, is the movement to end slavery. In Western Europe and the Americas, abolitionism was a historic movement that sought to end the Atlantic slave trade and liberate the enslaved people. The British ...
in 1807. Many years later, during the 2020
George Floyd protests The George Floyd protests were a series of protests and civil unrest against police brutality and racism that began in Minneapolis on May 26, 2020, and largely took place during 2020. The civil unrest and protests began as part of internati ...
, Lloyd's issued a statement, apologising "for the role played by the Lloyd's market in the 18th and 19th century slave trade — an appalling and shameful period of English history, as well as our own." Just after Christmas 1691, the small club of marine insurance underwriters relocated to No. 16 Lombard Street; a
blue plaque A blue plaque is a permanent sign installed in a public place in the United Kingdom and elsewhere to commemorate a link between that location and a famous person, event, or former building on the site, serving as a historical marker. The term i ...
on the site commemorates this. This arrangement carried on until 1773, long after the death of Edward Lloyd in 1713, when the participating members of the insurance arrangement formed a committee and underwriter John Julius Angerstein acquired two rooms at the Royal Exchange in Cornhill for "The Society of Lloyd's". The Royal Exchange was destroyed by fire in 1838, forcing Lloyd's into temporary offices at
South Sea House South is one of the cardinal directions or compass points. The direction is the opposite of north and is perpendicular to both east and west. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Proto-Germanic ''*sunþaz' ...
,
Threadneedle Street Threadneedle Street is a street in the City of London, England, between Bishopsgate at its northeast end and Bank junction in the southwest. It is one of nine streets that converge at Bank. It lies in the ward of Cornhill. History The stree ...
. The Royal Exchange was rebuilt by 1844, but many of Lloyd's early records were lost in the blaze. In 1871, the first Lloyd's Act was passed in Parliament which gave the business a sound legal footing. Around that time, it was unusual for a Lloyd's syndicate to have more than five or six backers; this lack of underwriting capacity meant Lloyd's was losing many of the larger risks to rival insurance companies. A marine underwriter named Frederick Marten is credited for first identifying this issue and creating the first "large syndicate", initially of 12 capacity providers. By the 1880s Marten's syndicate had outgrown many of the major insurance companies outside Lloyd's.


Early 20th century: San Francisco earthquake and first Lloyd's building

On 18 April 1906, a major earthquake and resulting fires destroyed over 80 per cent of the city of
San Francisco San Francisco (; Spanish language, Spanish for "Francis of Assisi, Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the List of Ca ...
. This event was to have a profound influence on building practices, risk modelling and the insurance industry. Lloyd's losses from the earthquake and fires were substantial, even though the writing of insurance business overseas was viewed with some wariness at the time. While some insurance companies were denying claims for fire damage under their earthquake policies or ''vice versa'', one of Lloyd's leading underwriters,
Cuthbert Heath Cuthbert Eden Heath OBE, DL (23 March 1859 – 8 March 1939) was a British insurance businessman, underwriter, broker, and syndicate owner at Lloyd's of London from 1880 until 1939. A relentless innovator and novel risk-taker, he has been call ...
, famously instructed his San Francisco agent to "pay all of our policy-holders in full, irrespective of the terms of their policies". The prompt and full payment of all claims helped to cement Lloyd's reputation for reliable claim payments and as an important trading partner for US brokers and policyholders. It was estimated that around 90 per cent of the damage to the city was caused by the resultant fires and as such, since the 1906 "fire following earthquake" has generally been a specified insured peril under most policies. Heath is also credited for introducing the now widely used "excess of loss" reinsurance protection for insurers following the San Francisco quake. Heath had become an underwriting member of Lloyd's in 1880, upon reaching the minimum age of 21, on J. S. Burrows' syndicate. Within a year he was underwriting for himself on a three-man syndicate; in 1883 he also opened a brokerage business. In 1885, he wrote the first fire reinsurance contract, reinsuring the Hand in Hand Insurance Company and marking the start of Heath's push to diversify the market into "non-marine" business. He also wrote Lloyd's first
burglary Burglary, also called breaking and entering and sometimes housebreaking, is the act of entering a building or other areas without permission, with the intention of committing a criminal offence. Usually that offence is theft, robbery or murder ...
insurance policy, its first "all risks" jewellery policy and invented "jewellers' block" cover. Later, during
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
he offered air-raid insurance, protecting against the risk of German strategic bombing. A subsequent Lloyd's Act in 1911 set out the Society's objectives, which include the promotion of its members' interests and the collection and dissemination of information. A year later in April 1912 Lloyd's suffered perhaps its most famous loss: the sinking of the ''
Titanic RMS ''Titanic'' was a British passenger liner, operated by the White Star Line, which sank in the North Atlantic Ocean on 15 April 1912 after striking an iceberg during her maiden voyage from Southampton, England, to New York City, United ...
''. It was insured for £1 million, which represented 20 per cent of the entire market's capacity, making it the largest marine risk ever insured. The record of its sinking in the 1912 "Loss Book" is on display in the Lloyd's building. The Society moved into its first owned, dedicated building in 1928. It was located at 12
Leadenhall Street __NOTOC__ Leadenhall Street () is a street in the City of London. It is about and links Cornhill, London, Cornhill in the west to Aldgate in the east. It was formerly the start of the A11 road (England), A11 road from London to Norwich, but th ...
and had been designed by Sir Edwin Cooper.


1960s: Hurricane Betsy and the Cromer report

In 1965 Lloyd's wrote the first satellite insurance policy, covering
Intelsat I Intelsat I (nicknamed Early Bird for the proverb "The early bird catches the worm") was the first commercial communications satellite to be placed in geosynchronous orbit, on April 6, 1965. It was built by the Space and Communications Group of H ...
in pre-launch. Later that year, when Lloyd's had around 6,000 members on 300 syndicates,
Hurricane Betsy Hurricane Betsy was an intense and destructive tropical cyclone that brought widespread damage to areas of Florida and the central United States Gulf Coast in September 1965. The storm's erratic nature, coupled with its intensity and minim ...
struck the
Gulf of Mexico The Gulf of Mexico ( es, Golfo de México) is an oceanic basin, ocean basin and a marginal sea of the Atlantic Ocean, largely surrounded by the North American continent. It is bounded on the northeast, north and northwest by the Gulf Coast of ...
coastlines, costing the market over £50 million. The catastrophe halted the capital that hitherto had been pouring into Lloyd's, and twice as many members left between 1965 and 1968 as had left over the prior eight years. It was soon realised that the membership of the Society, which had been largely made up of market participants, was too small in relation to the market's capitalisation and the risks that it was taking on. Lloyd's response was to commission a secret internal inquiry in 1968, headed by
Lord Cromer Earl of Cromer is a title in the Peerage of the United Kingdom, held by members of the Baring family, of German descent. It was created for Evelyn Baring, 1st Viscount Cromer, long time British Consul-General in Egypt. He had already been cr ...
, a former
Governor of the Bank of England The governor of the Bank of England is the most senior position in the Bank of England. It is nominally a civil service post, but the appointment tends to be from within the bank, with the incumbent grooming their successor. The governor of the Ba ...
. This report advocated the widening of membership to non-market participants, including non-British subjects and then women, and the reduction of the onerous capitalisation requirements (thus creating a minor investor known as a "mini-Name"). The report also drew attention to the danger of
conflicts of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations i ...
. The liability of the individual Names was unlimited, and thus all their personal wealth and assets were at risk.


1970s: Changes in the financial markets

During the 1970s, a number of issues arose which were to have significant influence on the course of the Society. The first was the tax structure in the UK: for a time,
capital gain Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. ...
s were
taxed A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
at up to 40 per cent (nil on gilts); earned income was taxed in the top bracket at 83 per cent, and investment income in the top bracket at 98 per cent. Lloyd's income counted as earned income, even for Names who did not work at Lloyd's, and this heavily influenced the direction of underwriting: in short, it was desirable for syndicates to make a (small) underwriting loss but a (larger) investment gain. The investment gain was typically achieved by "
bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemical ...
washing" or "gilt stripping": selling the gilt or other bond cum dividend and buying it back
ex-dividend The ex-dividend date, also known as the reinvestment date, is an investment term involving the timing of payment of dividends on stocks of corporations, income trusts, and other financial holdings, both publicly and privately held. The ex-date or ...
, thus forfeiting the interest income in exchange for a tax-free capital gain. Syndicate funds were also moved offshore (which later created problems through fraud and self-dealing). Because Lloyd's was a tax shelter as well as an insurance market, the second issue affecting it was an increase in its external membership: by the end of the 1970s, the number of passive investors dwarfed the number of underwriters working in the market. Third, during the decade a number of scandals had come to light, including the collapse of F. H. "Tim" Sasse's non-marine syndicate 762, which had highlighted both the lack of regulation and the lack of legal powers of the Committee of Lloyd's (as it was then) to manage the Society.


Late 1970s: Sasse scandal and other issues

The collapse of the Sasse syndicate came after it wrote a "binding authority" in 1975 that delegated underwriting authority to Florida-based expatriate Dennis Harrison to write property and fire risks through his Den-Har Underwriters agency, even though Den-Har was not an approved Lloyd's coverholder (a fact noticed neither by Sasse nor Lloyd's Non-Marine Association). Den-Har had suspected
Mafia "Mafia" is an informal term that is used to describe criminal organizations that bear a strong similarity to the original “Mafia”, the Sicilian Mafia and Italian Mafia. The central activity of such an organization would be the arbitration of d ...
links and many of the risks written were rigged: typically dilapidated buildings in slums such as
New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...
's
south Bronx The South Bronx is an area of the New York City Borough (New York City), borough of the Bronx. The area comprises neighborhoods in the southern part of the Bronx, such as Concourse, Bronx, Concourse, Mott Haven, Bronx, Mott Haven, Melrose, B ...
, which soon burned down after being insured for large sums. Once the three-year Lloyd's accounting period passed, the 110 Names on syndicate 762 were told they faced substantial losses, from mostly fraudulent claims. Sasse's reinsurer, the
Instituto de Resseguros do Brasil IRB Brasil RE, formerly known as the Reinsurance Institute of Brazil (corporate name: IRB Brasil RE) operates in the market for reinsurance. History Created in 1939 by Getúlio Vargas, IRB was intended to provide reinsurance to domestic companie ...
(IRB), refused to pay its share of the fraudulent losses. The Names (few in number for such large losses) took legal action and ultimately paid only £6.25m of £15m of Den-Har claims under the 1976 year, leaving the Corporation of Lloyd's to pay the remainder. The Corporation also paid the near £7m loss for 1977. Sasse had also been one of 57 underwriters on other syndicates that wrote loss-making "computer leasing" policies in the late 1970s. These claims ultimately ran above $450m, wiping out more than half the entire market's profit in a single year. Problems also developed out of the Oakley Vaughan agency run by brothers Edward and Charles St George, which had written far more business than its capacity allowed in order to invest premium to take advantage of high interest rates. By writing swathes of business regardless of whether the premiums were adequate, the St Georges left their Names with serious losses. Lloyd's had commissioned investigations into Oakley Vaughan, but investigators were denied access to the books and relied only on reassurances that the agency was profitable. Arising simultaneously with these developments were wider issues: first, in the US, an ever-widening interpretation by the courts of insurance coverage in relation to
workers' compensation Workers' compensation or workers' comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her emp ...
for
asbestosis Asbestosis is long-term inflammation and pulmonary fibrosis, scarring of the human lung, lungs due to asbestos, asbestos fibers. Symptoms may include shortness of breath, cough, wheezing, and chest pain, chest tightness. Complications may include ...
-related claims, which created a huge hole in Lloyd's loss-payment reserves, which was initially not recognised and then not acknowledged. Second, by the end of the decade, almost all of the market agreements, such as the Joint Hull Agreement, which were effectively
cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mos ...
s mandating minimum terms, had been abandoned under pressure of competition. Third, new specialised policies had arisen which had the effect of concentrating risk: these included "run-off" policies, under which the liability of previous underwriting years would be transferred to the current year, and "time and distance" policies, whereby reserves would be used to buy a guarantee of future income.


Early 1980s: New Lloyd's Act, Lioncover and Centrewrite

;Fisher report In 1980, Sir Henry Fisher was commissioned by the Council of Lloyd's to produce the foundation for a new Lloyd's Act. The recommendations of his report addressed the "democratic deficit" and the lack of regulatory muscle. Fisher, working with Richard Southwell QC, drafted the Lloyd's Act of 1982 which further redefined the structure of the business and was designed to give external Names, introduced in response to the Cromer report, a say in the running of the business through a new governing Council. The main purpose of the 1982 Act was to separate the ownership of the managing agents of the underwriting syndicates from the ownership of the broking houses (which acted as intermediaries, not as underwriters), with the objective of removing conflicts of interest. ;PCW scam and Lioncover Immediately after the passing of the 1982 Act, evidence came to light and internal disciplinary proceedings were commenced against a number of underwriters who had allegedly siphoned money from their syndicates to their own accounts. These individuals included a deputy chairman of Lloyd's and some of its leading underwriters. Successful marine underwriter Ian Posgate, who at one point had written 20 per cent of the Lloyd's marine market, was expelled under suspicions but later acquitted of criminal charges. His name remained tarnished and he did not return to the market, retiring to run his Oxfordshire farm until his death in 2017 aged 87. A greater debacle arose when Peter Cameron-Webb and Peter Dixon, of PCW Underwriting Agencies, allegedly defrauded their business of some $60m through rigged reinsurance transactions and fled to the United States, never to return. The emergence of fraud at PCW was the first in a series of events that led to the resignation of Lloyd's chairman Sir Peter Green in 1983. Lloyd's was later forced to make a settlement with the roughly 3,000 Names on the various PCW syndicates involved and to reinsure their liabilities into a new syndicate, number 9001, in turn reinsured by a unique vehicle named Lioncover, which was set up as a Lloyd's subsidiary insurance company. Lioncover assumed the liabilities of PCW as well as the associated WMD Underwriting Agencies and Richard Beckett Underwriting Agencies in 1987. In 1988 it also assumed the 1967–1969 liabilities of syndicates 2 and 49. Dixon and Cameron-Webb remained at large in the US; Cameron-Webb reportedly died in 2004 in a nursing home in California. Lioncover's PCW liabilities were reinsured as part of the
Equitas Equitas is a group of companies that was formed in 1996 to assume by way of reinsurance the vast and crippling liabilities that had accumulated in the syndicates at Lloyd's of London on insurance policies written on the 1992 and all prior years of ...
arrangement in the late 1990s and transferred to
National Indemnity Company National Indemnity Company is an insurance company based in Omaha, Nebraska, United States, and founded in 1940 by Jack Dabney Ringwalt. It is a subsidiary of Berkshire Hathaway, which bought the company in 1967. It is Berkshire's oldest operati ...
in two stages in 2007 and 2009. Residual funds in Lioncover were later distributed to surviving PCW Names or donated to the Lloyd's Charities Trust. Lioncover was voluntarily dissolved in 2014. ;Warrilow syndicate and Centrewrite Lloyd's also faced action from Names on C. J. Warrilow's syndicate 553, which had chronically exceeded its underwriting capacity in the early 1980s and failed to adequately reinsure the huge quantity of risks it was taking on. The solution was to create a new company in 1990 into which these liabilities could be reinsured in order to relieve the Warrilow Names. This entity was named Centrewrite Ltd and in 1993 it assumed Warrilow's 1985 and prior years' liabilities, separately also offering "estate protection plans" (EPPs) for resigned Names. Tens of thousands of Lloyd's Names bought these reinsurance policies. Centrewrite still exists today but has not written any EPPs since 2011 and conducts little other business; its most recent transaction was in 2013 when it assumed the 2001 liabilities of the life syndicate 1171. It also reinsured the 1997–1999 years of Crowe syndicate 1204 and the 1999–2001 years of Cotesworth syndicate 535. In 2012 the Crowe and Cotesworth liabilities (then valued at just over £17m) were novated to Riverstone (a Fairfax company) meaning minimal liabilities remain in Centrewrite today. In 1986, the year Lloyd's moved into a new building at 1 Lime Street (where it remains today), the British government commissioned Sir Patrick Neill to report on the standard of investor protection available at Lloyd's. His report was produced in 1987 and made a large number of recommendations, but was never implemented in full.


Late 1980s: Piper Alpha and the LMX spiral

It has long been normal for one Lloyd's syndicate to reinsure another, but when
Piper Alpha Piper Alpha was an oil platform located in the North Sea approximately north-east of Aberdeen, Scotland. It was operated by Occidental Petroleum (Caledonia) Limited (OPCAL) and began production in 1976, initially as an oil-only platform but la ...
, a
North Sea oil North Sea oil is a mixture of hydrocarbons, comprising liquid petroleum and natural gas, produced from petroleum reservoirs beneath the North Sea. In the petroleum industry, the term "North Sea" often includes areas such as the Norwegian Sea and ...
rig, exploded on 6 July 1988 causing an initial $1.4bn loss, the practice had become so widespread that the underwriters in Lime Street initially had no idea how extensive their exposure was: the loss was passed around in what became known as the London market excess of loss (LMX) "spiral" and claim values escalated out of control. The rig's operator,
Occidental Petroleum Occidental Petroleum Corporation (often abbreviated Oxy in reference to its ticker symbol and logo) is an American company engaged in hydrocarbon exploration in the United States, and the Middle East as well as petrochemical manufacturing in the ...
, bought a direct insurance policy from Lloyd's underwriters, who then passed part of their shares of the risk on to other syndicates via reinsurance. Those reinsurers then in turn reinsured part of the risk out to other reinsurance underwriters within Lloyd's (known as "retrocessionaires"), and so on. Consequently, many syndicates, especially those writing a large amount of excess of loss reinsurance, became exposed to the same claim multiple times through multiple layers in the spiral. Other catastrophes, including
Hurricane Hugo Hurricane Hugo was a powerful Cape Verde tropical cyclone that inflicted widespread damage across the northeastern Caribbean and the Southeastern United States in September 1989. Across its track, Hugo affected approximately 2 million peop ...
and the ''Exxon Valdez'' oil spill in 1989, also went into the spiral. Some of the leading LMX reinsurers at the time that suffered serious spiral losses included the numerous syndicates managed by the Gooda Walker agency, Devonshire syndicate 216, Rose Thomson Young 255, R. J. Bromley 475, and Patrick Fagan's already challenged Feltrim syndicates 540 and 542. Gooda Walker syndicate 298 became the first fatal casualty, with 13,500 policies being exposed to the Piper Alpha disaster alone and its 1989 account producing a 650 per cent loss on capacity; Feltrim followed with a 550 per cent loss on capacity. Roy Bromley, underwriter of syndicate 475, later committed suicide after being dismissed by his Board and reportedly becoming distressed at his operation's mounting losses. Not all excess of loss writers succumbed to the LMX spiral; in fact the spiral was relatively confined to a minority of such syndicates. Among the prominent reinsurers that remained profitable throughout the spiral were C. F. Palmer syndicate 314, M. H. Cockell 269/570 and D. P. Mann 435, while G. S. Christensen 958 reported only a slight loss in 1989 but healthy profits in 1990 and 1991.


1990s: Fallout of the asbestosis affair


Emergence of claims

The early to mid-1990s saw the continuation of Lloyd's most traumatic period in its history that had begun with the explosion on Piper Alpha. Unexpectedly large legal awards in US courts for
punitive damages Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. ...
led to substantial claims on
asbestos Asbestos () is a naturally occurring fibrous silicate mineral. There are six types, all of which are composed of long and thin fibrous crystals, each fibre being composed of many microscopic "fibrils" that can be released into the atmosphere b ...
, pollution and
health hazard A hazard is a potential source of harm. Substances, events, or circumstances can constitute hazards when their nature would allow them, even just theoretically, to cause damage to health, life, property, or any other interest of value. The probabi ...
(APH) policies, some dating as far back as the 1940s. Many of these policies were open-peril policies, meaning that they covered any claim not specifically excluded. Other policies (called standard, or broad) only cover stated perils, such as fire. The classic example of "long-tail" insurance risks is asbestosis/
mesothelioma Mesothelioma is a type of cancer that develops from the thin layer of tissue that covers many of the internal organs (known as the mesothelium). The most common area affected is the lining of the lungs and chest wall. Less commonly the lining ...
claims under employers' liability or workers' compensation policies. An employee at an industrial plant may have been exposed to asbestos in the 1960s, fallen ill 20 years later and claimed compensation from his former employer in the 1990s. The employer would report a claim to the insurance company that wrote the policy in the 1960s. However, because the insurer did not fully understand the nature of the future risk back in the 1960s, it and its reinsurers would not have properly priced or reserved for it. In the case of Lloyd's, this resulted in the bankruptcy of thousands of individual investors who indemnified general liability policies written from the 1940s to the mid-1970s for companies with exposure to asbestosis claims.


Reinsurance to close

It may not be immediately clear how current members of current Lloyd's syndicates, which accept business one year at a time, could be liable to pay historical claims. This came about as a result of the Lloyd's accounting practice known as reinsurance to close (RITC). A member "joined" a syndicate for one calendar year only, known as the "annual venture". At the end of the year, the syndicate as an ongoing trading entity was effectively disbanded. However, usually the syndicate re-formed for the next calendar year with the same identifying number and more or less the same membership. Since claims can take time to be reported and then paid, the profit or loss for each syndicate took time to realise. The practice at Lloyd's was to wait three years (that is, 36 months from the beginning of the year in which the business was written) before "closing" the year for accounting purposes and declaring a result. To calculate the profit or loss, reserves were set aside for future claims payments, for claims that had already been notified but not yet paid, as well as estimated amounts for claims that had been
incurred but not reported In insurance, incurred but not reported (IBNR) claims is the amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the ...
(IBNR). This estimation is difficult and can be inaccurate; in particular, long-tail liability policies tend to produce claims long after the policies are written. The reserve for future claims liabilities was set aside in an unusual way. The syndicate bought a RITC policy to pay any future claims; the premium was equal to the amount of the reserve. This transaction allowed the year to be closed, and the syndicate's profit or loss declared. The reinsurer was always another Lloyd's syndicate(s), often the succeeding year of the same syndicate: the members of syndicate '1' in 1985 reinsured the future claim liabilities for members of syndicate '1' in 1984. The membership might be the same, or it might have changed. In this manner, liability for past losses could be transferred year after year until it reached the current syndicate. A member joining a syndicate with a long history of such transactions could – and often did – pick up liability for losses on policies written decades previously. As long as the reserves had been accurately estimated, and the appropriate RITC premium paid every year, then all would have been well, but in many cases this had not been possible: no-one could have predicted the surge in APH losses. Therefore, the amounts of money transferred from earlier years by successive RITC premiums to cover these losses were grossly insufficient, and the current members had to pay the shortfall. As a result, a great many Names whose syndicates wrote long-tail liability at Lloyd's faced significant financial loss or ruin by the late 1980s to mid-1990s.


Dilution of liabilities and the consequences

It was alleged that in the early 1980s some Lloyd's officials began a recruitment programme to enroll new Names to help capitalise Lloyd's prior to the expected onslaught of APH claims. This allegation became known as "recruit to dilute": in other words, recruit more Names to dilute the losses. When the huge extent of asbestosis losses came to light in the early 1990s, for the first time in Lloyd's history large numbers of members either were unable to pay the claims or refused, many alleging that they were the victims of fraud, misrepresentation, and/or negligence. The opaque system of accounting at Lloyd's made it difficult, if not impossible, for many Names to understand the extent of the liability that they personally and their syndicates had subscribed to. Also, numerous underwriters of long-tail non-marine business, concerned at their exposures to the impending asbestosis crisis, had sought to reinsure their liabilities with other carriers. Twenty syndicates, including Lloyd's deputy chairman Murray Lawrence's, paid millions of pounds in premiums to Richard H. M. Outhwaite to assume approximately 80 per cent of the market's asbestos exposure on his syndicate 317. This ended in disaster for Outhwaite's Names, whose previously healthy profits were wiped out and then some. Another asbestosis-hit operation, Pulbrook syndicates 90/334, had taken out reinsurance in 1981 on its general liability business with Merrett syndicate 418; however, in 1990 Stephen Merrett (who by now controlled Pulbrook) won an arbitration ruling to void that arrangement due to non-disclosure of the extent of asbestos exposure, leaving the Pulbrook Names without cover for their losses of £100,000 each on average. Even earlier, in 1974, the underwriter of R. W. Sturge syndicate 210, Ralph Rokeby-Johnson, who specialised in American industrial risks, bought "stop-loss" reinsurance from
Fireman's Fund Fireman's Fund Insurance Company was an insurance company based in Petaluma, California which provided personal and commercial property and casualty insurance products in the United States. The company was a principal U.S. subsidiary of Allianz, ...
and Kemper Insurance in the US on Sturge's pre-1969 exposures that were accumulating into the present. This contract developed so poorly that Fireman's Fund later sought its own stop-loss cover for the losses assumed from Sturge. Rokeby-Johnson later prompted Lloyd's to create a
working party A working group, or working party, is a group of experts working together to achieve specified goals. The groups are domain-specific and focus on discussion or activity around a specific subject area. The term can sometimes refer to an interdis ...
on asbestosis.


Reconstruction and Renewal

During the mid-1990s the market was forced to restructure. Under the chairmanship of Sir David Rowland and chief executive Peter Middleton, an ambitious plan entitled "Reconstruction and Renewal" (R&R) was produced in 1995, with proposals for separating the ongoing Lloyd's from its past losses. Liabilities for all pre-1993 business (other than life assurance) were to be compulsorily transferred (by RITC) into a special vehicle named
Equitas Equitas is a group of companies that was formed in 1996 to assume by way of reinsurance the vast and crippling liabilities that had accumulated in the syndicates at Lloyd's of London on insurance policies written on the 1992 and all prior years of ...
(which would require the approval of the UK's Department of Trade and Industry) at a cost of around $21bn. Many Names faced large bills, but the plan also provided for a settlement of their disputes, a tax on recent profits, and the write-off of nearly $5bn owed in the form of "debt credits", skewed towards those with the worst losses. The plan was debated at length, modified, and eventually strongly supported by the Association of Lloyd's Members (ALM) and most leaders of Names' action groups. New CEO
Ron Sandler Ron Sandler CBE is a British businessman best known for his contribution in the rescue of Lloyd's of London, where he was CEO from 1995 to 1999. He was also the government-appointed executive chairman of Northern Rock during its three-year nationa ...
was instrumental in its implementation. Money was raised in many ways, including the sale and leaseback of the Lloyd's building, and a tax on future business. Individual offers of settlement were accepted by 95 per cent of Names. The past liabilities on the 1992 and prior years were transferred to Equitas in September 1996, including those under Lioncover and Centrewrite. The "recruit to dilute" fraud allegations were heard in an eight-month trial in 2000 in the case ''Sir William Jaffray & Ors v. The Society of Lloyd's'' and were rejected by the judge; an appeal was heard in 2002 and unanimously rejected. On each occasion the allegation that there had been a policy to recruit to dilute was dismissed and Names were urged to settle; however, at first instance the judge described the Names as "the innocent victims ..of staggering incompetence" and the appeal court found that representations that Lloyd's had a rigorous auditing system were false and strongly hinted that one of Lloyd's main witnesses, former chairman Murray Lawrence, had lied in his testimony. Lloyd's then instituted some major structural changes: corporate members with limited liability were permitted to join and underwrite insurance; no new unlimited-liability Names were allowed to join (although a few hundred existing ones remained); financial requirements for underwriting were changed, to prevent excess underwriting that was not backed by liquid assets; and market oversight significantly increased. Lloyd's rebounded and started to thrive again after the catastrophic losses arising out of the World Trade Center attack, but it faced increased competition from newly-created companies in
Bermuda ) , anthem = "God Save the King" , song_type = National song , song = " Hail to Bermuda" , image_map = , map_caption = , image_map2 = , mapsize2 = , map_caption2 = , subdivision_type = Sovereign state , subdivision_name = , e ...
and other markets. In 2006 the
Berkshire Hathaway Berkshire Hathaway Inc. () is an American Multinational corporation, multinational conglomerate (company), conglomerate holding company headquartered in Omaha, Nebraska, United States. Its main business and source of capital is insurance, from ...
subsidiary
National Indemnity Company National Indemnity Company is an insurance company based in Omaha, Nebraska, United States, and founded in 1940 by Jack Dabney Ringwalt. It is a subsidiary of Berkshire Hathaway, which bought the company in 1967. It is Berkshire's oldest operati ...
(NICO) agreed to assume all of Equitas' assets and liabilities, providing $7bn of new reinsurance cover for future claims payments in addition to the $8.7bn of existing reserves within Equitas. The transfer (in two phases between 2007 and 2009) represented "finality" under English law for all affected Names, who now faced "no further liability whatsoever" to the pre-1993 losses.


Structure

Lloyd's is not an insurance company; it is a market of members. As the oldest continuously active insurance marketplace in the world, Lloyd's has retained some unusual structures and practices that differ from all other insurance providers today. Originally created as a non-incorporated association of subscribing members, it was incorporated by the Lloyd's Act 1871 and is currently governed under the Lloyd's Acts of 1871 through to 1982. Lloyd's itself does not underwrite insurance business, leaving that to its members. Instead, the Society operates effectively as a market regulator, setting rules under which members operate and offering centralised administrative services to those members.


Council of Lloyd's

The Lloyd's Act 1982 defines the management structure and rules under which the market operates. Under the Act, the Council of Lloyd's is responsible for the management and supervision of the market. It is regulated by the Prudential Regulation Authority and the
Financial Conduct Authority The Financial Conduct Authority (FCA) is a financial regulation, financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry. The ...
. The Council normally has six working, six external and six nominated members. The appointment of nominated members, including that of the chief executive officer, is confirmed by the
Governor of the Bank of England The governor of the Bank of England is the most senior position in the Bank of England. It is nominally a civil service post, but the appointment tends to be from within the bank, with the incumbent grooming their successor. The governor of the Ba ...
. The working and external members are elected by Lloyd's members. The chairman and deputy chairmen are elected annually by the Council from among the working members of the Council. All members are approved by the regulating bodies. The Council can discharge some of its functions directly by making decisions and issuing resolutions, requirements, rules and bylaws. The Council delegates most of its daily oversight roles, particularly relating to ensuring the market operates successfully, to the Franchise Board. The Franchise Board lays down guidelines for all syndicates and operates a business planning and monitoring process to safeguard high standards of underwriting and risk management, thereby improving sustainable profitability and enhancing the financial strength of the market. The Board is chaired by the chairman of Lloyd's and has three executive members, three non-executives connected to the market and five independent non-executives.


Chairmen of Lloyd's

The following is a list of the chairmen of Lloyd's since 1979:


Chief executives of Lloyd's

The following is a list of the chief executive officers of Lloyd's since 1983:


Businesses at Lloyd's

There are two classes of people and firms active at Lloyd's. The first are members, or providers of capital. The second are agents, brokers, and other professionals who support the members, underwrite the risks and represent outside customers (for example, individuals and companies seeking insurance, or insurance companies seeking reinsurance).


Members

For most of Lloyd's history, rich individuals known as Names backed policies written at Lloyd's with all of their personal wealth and took on unlimited liability. Since 1994, Lloyd's has allowed corporate members into the market, with
limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
. The asbestosis losses in the early 1990s devastated the finances of many Names: upwards of 1,500 out of 34,000 Names (4.4 per cent) were declared bankrupt. This scared away other potential Names. In 2011 individual Names provide only 11 per cent of capacity at Lloyd's, with UK-listed and other corporate members providing 30 per cent and the remainder via the international insurance industry. No new Names with unlimited liability are admitted, and the importance of individual Names will continue to decline as they slowly withdraw, convert (generally into
limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...
s), or die. In 2014, Names with unlimited liability provided just 2 per cent of the overall capacity in Lloyd's.


Managing agents

Managing agents sponsor and manage syndicates. They canvas members for commitments of capacity, create the syndicate, hire underwriters, and oversee all of the syndicate's activities. Managing agents may run more than one syndicate, as borne out in the fact that in 2021 the 75 syndicates writing business at Lloyd's were operated by just 50 managing agents.


Members' agents

Members' agents co-ordinate the members' underwriting and act as a buffer between Lloyd's, the managing agents and the members. They were introduced in the mid-1970s and grew in number until many went bust; many of the businesses merged, and there are now only four left (Argenta, Hampden, Alpha and LMAS, which has no active Names). It is mandatory that unlimited Names write through a members' agent, and many limited liability members also choose to do so.


Lloyd's coverholder

Coverholders are a major source of business for Lloyd's. Their numbers have grown steadily in recent years and in 2021 there were 4,054, producing an increasingly meaningful share of the market's overall premium income. The balance of Lloyd's business is distributed around the world through a network of brokers. Coverholders allow Lloyd's syndicates to operate in a region or country as if they were a local insurer. This is achieved by Lloyd's syndicates delegating their underwriting authority to coverholders. A coverholder can have restricted or full authority to underwrite specified business on behalf of a Lloyd's syndicate. It will usually issue the insurance documentation and will often also handle claims. The document setting out the terms of the coverholder's delegated authority is known as a binding authority.


Lloyd's brokers

Outsiders, whether individuals or other insurance companies, cannot transact business directly with Lloyd's syndicates. They must hire an approved Lloyd's broker, who are the only customer-facing organisations at Lloyd's. They are therefore often referred to as intermediaries. Lloyd's brokers shop customers' risks around the syndicates, trying to obtain the best coverage and most competitive terms.


Integrated Lloyd's vehicles

When corporations became admitted as Lloyd's members, they often disliked the traditional structure. Insurance companies did not want to rely on the underwriting skills of syndicates they did not control, so they started their own. An integrated Lloyd's vehicle (ILV) is a group of companies that combines a corporate member, a managing agent, and a syndicate under common ownership. Some ILVs allow minority contributions from other members, but most now try to operate on an exclusive basis.


Financial security

Lloyd's capital structure, often referred to as the "chain of security", provides financial security to policyholders and capital efficiency to members. The Corporation is responsible for setting both member and central capital levels to achieve a level of capitalisation that is robust and allows members the potential to earn superior returns. There are three "links" in the chain: the funds in the first and second links are held in trust, primarily for the benefit of insureds whose policies are underwritten by the relevant member. Members underwrite for their own account and are not liable for other members' losses (i.e. liabilities are several, not joint). The third link consists largely of the Lloyd's Central Fund, which contains mutual assets held by the Corporation which are available, subject to Council approval as required, to meet any member's liabilities. As well as the Central Fund, the third link contains Corporation assets, subordinated debt, and a "callable layer" which can be invoked should the final link require topping up.


Financial performance

Each Lloyd's syndicate is responsible for determining how much money to hold in reserve for its known liabilities and its estimated unknown liabilities, and each may choose to release some of its reserves for prior-year claims if it (and its independent auditors) deems it appropriate. Conversely, reserves may need to be strengthened if prior-year loss estimates deteriorate. Overall reserve releases can improve the syndicate's "accident year" combined ratio (the sum of the loss ratio and the expense ratio), whereas overall reserve increases can worsen the accident year combined ratio. The combined ratio after these reserve movements is known as the "calendar year" result.


Historical results

Lloyd's worst results in its long history were in the 1989 through 1991 years, each producing overall losses of over £2bn; the late 1990s were also punctuated by repeated and significant underwriting losses. In 2001 the calendar year result was a 140 per cent combined ratio, driven largely by claims arising out of the World Trade Center attack, reserve increases for prior-year liabilities and deteriorating pricing levels. However, the market subsequently enjoyed profitability in most years except those marked by unusual levels of large natural catastrophes. For example, the
2005 Atlantic hurricane season The 2005 Atlantic hurricane season was the most active Atlantic hurricane season in history, until the record was broken 15 years later in 2020. The season broke numerous records at the time, with 28 tropical or subtropical storms recorded. ...
(which included
Hurricane Katrina Hurricane Katrina was a destructive Category 5 Atlantic hurricane that caused over 1,800 fatalities and $125 billion in damage in late August 2005, especially in the city of New Orleans and the surrounding areas. It was at the time the cost ...
) drove the Lloyd's overall combined ratio to 112 per cent, while the 2017 Atlantic hurricanes coupled with destructive wildfires in California caused the Lloyd's market to report a 114 per cent combined ratio result in that year.


Recent results

In its most recent annual report, for 2021, Lloyd's reported an underwriting profit of £1.74bn, plus a £948m gain on investments to produce an overall pre-tax profit of £2.28bn, compared to a pre-tax loss of £887m in 2020. The 2021 calendar-year combined ratio was 93.5 per cent, which was Lloyd's first profitable result since 2016. Gross premiums written totalled £39.2bn, which was an increase from £35.5bn in 2020, without taking exchange-rate fluctuations into account. Notable losses in the year included
Hurricane Ida Hurricane Ida was a deadly and extremely destructive Category 4 Atlantic hurricane in 2021 that became the second-most damaging and intense hurricane to make landfall in the U.S. state of Louisiana on record, behind Hurricane Katrina in 200 ...
, the North American winter storm known as 'Storm Uri' and the European floods affecting several countries such as Germany and Belgium. The following table details some key financial metrics for the Lloyd's market for the past 10 years, as reported in each year's annual report:


Timeline of significant events at Lloyd's

* 1686 Earliest reference to Edward Lloyd's coffee house on Tower Street * 1691 Coffee house relocated to Lombard Street * 1774 Society of Lloyd's founded at the Royal Exchange * 1783
Zong massacre The ''Zong'' massacre was a mass killing of more than 130 African enslaved people by the crew of the British slaver ship ''Zong'' on and in the days following 29 November 1781. The William Gregson slave-trading syndicate, based in Liverpool, ...
trial * 1799 Sinking of * 1871 Lloyd's Act * 1906
San Francisco earthquake At 05:12 Pacific Standard Time on Wednesday, April 18, 1906, the coast of Northern California was struck by a major earthquake with an estimated moment magnitude of 7.9 and a maximum Mercalli intensity of XI (''Extreme''). High-intensity sha ...
* 1909 Sinking of * 1911 Lloyd's Act * 1912 Sinking of RMS ''Titanic'' * 1914 Sinking of * 1925 Market relocated to its first owned building, at 12
Leadenhall Street __NOTOC__ Leadenhall Street () is a street in the City of London. It is about and links Cornhill, London, Cornhill in the west to Aldgate in the east. It was formerly the start of the A11 road (England), A11 road from London to Norwich, but th ...
* 1955 Supported the
Montgomery bus boycott The Montgomery bus boycott was a political and social protest campaign against the policy of racial segregation on the public transit system of Montgomery, Alabama. It was a foundational event in the civil rights movement in the United States ...
by insuring the civil rights volunteers'
carpool Carpooling (also car-sharing, ride-sharing and lift-sharing) is the sharing of car journeys so that more than one person travels in a car, and prevents the need for others to have to drive to a location themselves. By having more people usi ...
fleet after local insurers refused to * 1956 Sinking of * 1958 Market relocated to new owned building, at 51 Lime Street * 1965
Hurricane Betsy Hurricane Betsy was an intense and destructive tropical cyclone that brought widespread damage to areas of Florida and the central United States Gulf Coast in September 1965. The storm's erratic nature, coupled with its intensity and minim ...
* 1968
Cromer Cromer ( ) is a coastal town and civil parish on the north coast of the English county of Norfolk. It is north of Norwich, north-northeast of London and east of Sheringham on the North Sea coastline. The local government authorities are Nor ...
report published * 1977 F. H. "Tim" Sasse syndicate scandal * 1978 disaster * 1977 Computer leasing losses emerged * 1979 ''Betelgeuse'' incident;
Three Mile Island accident The Three Mile Island accident was a partial meltdown of the Three Mile Island, Unit 2 (TMI-2) reactor in Pennsylvania, United States. It began at 4 a.m. on March 28, 1979. It is the most significant accident in U.S. commercial nuclea ...
* 1980 An Asbestos Working Party was created to monitor the increasing losses from asbestos injury * 1982 Accountants Neville Russell warned that assessing the losses from asbestos injury was "an impossibility" * 1982 Lloyd's Act * 1986 Market relocated to the current
Lloyd's building The Lloyd's building (sometimes known as the Inside-Out Building) is the home of the insurance institution Lloyd's of London. It is located on the former site of East India House in Lime Street, in London's main financial district, the City of ...
, at 1 Lime Street * 1988
Piper Alpha Piper Alpha was an oil platform located in the North Sea approximately north-east of Aberdeen, Scotland. It was operated by Occidental Petroleum (Caledonia) Limited (OPCAL) and began production in 1976, initially as an oil-only platform but la ...
disaster * 1989 ''Exxon Valdez'' oil spill;
Hurricane Hugo Hurricane Hugo was a powerful Cape Verde tropical cyclone that inflicted widespread damage across the northeastern Caribbean and the Southeastern United States in September 1989. Across its track, Hugo affected approximately 2 million peop ...
;
Loma Prieta earthquake The 1989 Loma Prieta earthquake occurred on California's Central Coast on October 17 at local time. The shock was centered in The Forest of Nisene Marks State Park in Santa Cruz County, approximately northeast of Santa Cruz on a section of t ...
* 1989 Lloyd's Community Programme founded, with first chairman Michael Wade * 1990s Escalation of the
asbestosis Asbestosis is long-term inflammation and pulmonary fibrosis, scarring of the human lung, lungs due to asbestos, asbestos fibers. Symptoms may include shortness of breath, cough, wheezing, and chest pain, chest tightness. Complications may include ...
affair and London market excess of loss (LMX) spiral * 1991
Typhoon Mireille Typhoon Mireille, known in the Philippines as Typhoon Rosing, was the costliest typhoon on record, until it was surpassed by Typhoon Hagibis in 2019 (when not adjusted for inflation). Striking Japan in September 1991, it became the 20th named sto ...
* 1992
Hurricane Andrew Hurricane Andrew was a very powerful and destructive Category 5 Atlantic hurricane that struck the Bahamas, Florida, and Louisiana in August 1992. It is the most destructive hurricane to ever hit Florida in terms of structures damaged ...
* 1993
Bishopsgate bombing The Bishopsgate bombing occurred on 24 April 1993, when the Provisional Irish Republican Army (IRA) detonated a powerful truck bomb on Bishopsgate, a major thoroughfare in London's financial district, the City of London. Telephoned warning ...
and subsequent establishment of
Pool Re Pool Reinsurance Company Limited, also known as Pool Re, was set up in 1993 by the insurance industry in cooperation with the UK Government in the wake of the Provisional Irish Republican Army, IRA Baltic Exchange bomb, bombing of the Baltic Excha ...
* 1994
Northridge earthquake The 1994 Northridge earthquake was a moment 6.7 (), blind thrust earthquake that occurred on January 17, 1994, at 4:30:55 a.m. PST in the San Fernando Valley region of the City of Los Angeles. The quake had a duration of approximately ...
* 1994 Hardship Scheme set up to help Names whose losses exceeded their assets * 1996
Equitas Equitas is a group of companies that was formed in 1996 to assume by way of reinsurance the vast and crippling liabilities that had accumulated in the syndicates at Lloyd's of London on insurance policies written on the 1992 and all prior years of ...
set up to harbour all pre-1993 exposures * 2000 A group of Names led by Sir William Jaffray issue court proceedings alleging fraud * 2001 World Trade Center attack * 2004 Hurricanes Charley, Frances, Ivan and Jeanne * 2005 Hurricanes Katrina, Rita and Wilma * 2006
Berkshire Hathaway Berkshire Hathaway Inc. () is an American Multinational corporation, multinational conglomerate (company), conglomerate holding company headquartered in Omaha, Nebraska, United States. Its main business and source of capital is insurance, from ...
assumed Equitas liabilities * 2010 ''Deepwater Horizon'' disaster * 2011 Tōhoku earthquake and tsunami * 2013
Inga Beale Dame Inga Kristine Beale, DBE (born 15 May 1963) is a British businesswoman and the former CEO of Lloyd's of London. In June 2018, it was announced that she would be stepping down as CEO of Lloyd's after leading the global insurance and reinsuranc ...
appointed first female chief executive officer of Lloyd's * 2017 Hurricanes Harvey, Irma and Maria and
California wildfires This is a partial and incomplete list of California wildfires. California has dry, windy, and often hot weather conditions from spring through late autumn that can produce moderate to severe wildfires. Pre-1800, when the area was much more for ...
* 2020
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
resulted in first ever temporary closure of Lloyd's building


Types of policies

Lloyd's syndicates write a diverse range of policies, both direct insurance and reinsurance, covering property, casualty, marine, energy, motor, aviation and many other types of risk. Lloyd's also has a unique niche in unusual, specialist business such as kidnap and ransom, fine art, specie, aviation war, satellites, personal accident, bloodstock and other insurances. Lloyd's is famous for writing policies to cover famous, unusual, or bizarre events. For example, Lloyd's has insured: ;Groups * A comedy theatre group against the risk of a member of their audience dying of laughter ;Inanimate objects * Participating automobiles in the carpools involved in the
Montgomery bus boycott The Montgomery bus boycott was a political and social protest campaign against the policy of racial segregation on the public transit system of Montgomery, Alabama. It was a foundational event in the civil rights movement in the United States ...
* A grain of rice with a portrait of the
Queen Queen or QUEEN may refer to: Monarchy * Queen regnant, a female monarch of a Kingdom ** List of queens regnant * Queen consort, the wife of a reigning king * Queen dowager, the widow of a king * Queen mother, a queen dowager who is the mother ...
and the
Duke of Edinburgh Duke of Edinburgh, named after the city of Edinburgh in Scotland, was a substantive title that has been created three times since 1726 for members of the British royal family. It does not include any territorial landholdings and does not produc ...
engraved on it for $20,000 * The development of the new World Trade Center with workers' compensation, general liability, excess liability and speciality insurance programmes ;People * The bodies of several
professional wrestler Professional wrestling is a form of theater that revolves around staged wrestling matches. The mock combat is performed in a ring similar to the kind used in boxing, and the dramatic aspects of pro wrestling may be performed both in the ring or ...
s, including Brian Adams,
Ric Flair Richard Morgan Fliehr (born February 25, 1949), known professionally as Ric Flair, is an American professional wrestler. Regarded by multiple peers and journalists as the greatest professional wrestler of all time, Flair has had a career spanni ...
,
Bret Hart Bret Hart (born July 2, 1957) is a Canadian-American retired professional wrestler, currently signed to WWE under a legend's contract. A member of the Hart wrestling family and a second-generation wrestler, he has an amateur wrestling backgr ...
,
Curt Hennig Curtis Michael Hennig (March 28, 1958 – February 10, 2003) was an American professional wrestler. He performed under his real name for promotions including the American Wrestling Association (AWA), the World Wrestling Federation (WWF; now WWE) ...
, Joe Laurinaitis (better known as
Road Warrior Animal Joseph Michael Laurinaitis (September 12, 1960 – September 22, 2020), better known by his ring name Road Warrior Animal (or simply Animal), was an American professional wrestler. Along with Road Warrior Hawk, he was one half of the tag team T ...
) and
Rick Rude Richard Erwin Rood (December 7, 1958 – April 20, 1999), better known by his ring name "Ravishing" Rick Rude, was an American professional wrestler who performed for many promotions, including World Championship Wrestling (WCW), World Wrestling ...
. However, as of 2017,
Dave Meltzer David Allen Meltzer (born October 24, 1959) is an American journalist who reports on professional wrestling and mixed martial arts. Since 1983, he has been the publisher and editor of the ''Wrestling Observer Newsletter'' (''WON''). He has als ...
reported that they no longer insure wrestlers. *
Toni Braxton Toni Michele Braxton (born October 7, 1967) is an American Contemporary R&B, R&B singer, songwriter, actress and television personality. She has sold over 70 million records worldwide and is one of the best-selling female artists in history. ...
's,
Celine Dion Céline Marie Claudette Dion ( ; born 30 March 1968) is a Canadian singer. Noted for her powerful and technically skilled vocals, Dion is the best-selling Canadian recording artist, and the best-selling French-language artist of all time. Her ...
's,
Bob Dylan Bob Dylan (legally Robert Dylan, born Robert Allen Zimmerman, May 24, 1941) is an American singer-songwriter. Often regarded as one of the greatest songwriters of all time, Dylan has been a major figure in popular culture during a career sp ...
's,
Whitney Houston Whitney Elizabeth Houston (August 9, 1963 – February 11, 2012) was an American singer and actress. Nicknamed "The Voice", she is one of the bestselling music artists of all time, with sales of over 200 million records worldwide. Houston in ...
's, and
Bruce Springsteen Bruce Frederick Joseph Springsteen (born September 23, 1949) is an American singer and songwriter. He has released 21 studio albums, most of which feature his backing band, the E Street Band. Originally from the Jersey Shore, he is an originat ...
's vocal cords *
Marlene Dietrich Marie Magdalene "Marlene" DietrichBorn as Maria Magdalena, not Marie Magdalene, according to Dietrich's biography by her daughter, Maria Riva ; however Dietrich's biography by Charlotte Chandler cites "Marie Magdalene" as her birth name . (, ; ...
's,
Betty Grable Elizabeth Ruth Grable (December 18, 1916 – July 2, 1973) was an American actress, pin-up girl, dancer, model, and singer. Her 42 films during the 1930s and 1940s grossed more than $100 million; for 10 consecutive years (1942–1951) she reign ...
's,
Brooke Shields Brooke Christa Shields (born May 31, 1965) is an American actress and model. She was initially a child model and gained critical acclaim at age 12 for her leading role in Louis Malle's film ''Pretty Baby'' (1978). She continued to model into ...
's,
Tina Turner Tina Turner (born Anna Mae Bullock; November 26, 1939) is an American-born Swiss retired singer and actress. Widely referred to as the "Honorific nicknames in popular music, Queen of Rock 'n' Roll", she rose to prominence as the lead singer o ...
's and
Mary Hart Mary Hart (born Mary Johanna Harum; November 8, 1950) is an American television personality and actress. She was the long-running host (1982–2011) of the syndicated gossip and entertainment round-up television program ''Entertainment Tonight'' ...
's legs *
Ken Dodd Sir Kenneth Arthur Dodd (8 November 1927 – 11 March 2018) was an English comedian, singer and occasional actor. He was described as "the last great music hall entertainer", and was primarily known for his live stand-up performances. A life ...
's teeth for $7.4m *
Michael Flatley Michael Ryan Flatley (born July 16, 1958) is an Irish-American dancer. He became known for Irish dance shows ''Riverdance'', '' Lord of the Dance'', ''Feet of Flames'', and ''Celtic Tiger Live''. Flatley's shows have played to more than 60 milli ...
's legs for $47m (the policy was only in effect when he was touring, and forbade him from dancing except on stage) * Cricketer
Merv Hughes Mervyn Gregory Hughes (born 23 November 1961) is a former Australian cricketer. A right-arm fast bowler, he represented Australia national cricket team, Australia in 53 Test cricket, Test matches between 1985 and 1994, taking 212 wickets. He pla ...
' trademark walrus mustache while playing for Australia between 1985 and 1994 *
Keiran Lee Adam Diksa (born 15 January 1984), better known by his stage name Keiran Lee, is an English pornographic actor, director, and producer who works mainly for Brazzers. He is one of the highest-paid pornographic actors. He has received several aw ...
's penis for $1m * The hands of the 1932 World Yo-Yo Champion
Harvey Lowe Harvey Lowe (30 October 1918 – 11 March 2009) was a Canadian radio presenter and world yo-yo champion. Early life Lowe was born in Victoria, British Columbia, Canada in 1918, the youngest of eight daughters and two sons of his parents. Wanting ...
*
Troy Polamalu Troy Aumua Polamalu (; born Troy Benjamin Aumua; April 19, 1981) is an American former football strong safety who played his entire 12-year career for the Pittsburgh Steelers of the National Football League (NFL). He played college football ...
's hair for $1m * Food critic and gourmet
Egon Ronay Egon Miklos Ronay (24 July 1915 – 12 June 2010) was a Hungarian-born food critic who wrote and published a famous series of guides to British and Irish restaurants and hotels in the 1950s and 1960s. These guidebooks are credited with raisin ...
's taste buds for £250,000 * Pat McAfee's legs during his
franchise tag In the National Football League (NFL), the franchise tag is a designation a team may apply to a player scheduled to become an unrestricted free agent. The tag binds the player to the team for one year if certain conditions are met. Each team has on ...
season with the
Indianapolis Colts The Indianapolis Colts are a professional American football team based in Indianapolis. The Colts compete in the National Football League (NFL) as a member club of the league's American Football Conference (AFC) South division. Since the 2008 ...
*
Will Smith Willard Carroll Smith II (born September 25, 1968), also known by his stage name The Fresh Prince, is an American actor and rapper. He began his Will Smith filmography, acting career starring as Will Smith (The Fresh Prince of Bel-Air), a ...
's stunt bungee jumping out of a helicopter into the
Grand Canyon The Grand Canyon (, yuf-x-yav, Wi:kaʼi:la, , Southern Paiute language: Paxa’uipi, ) is a steep-sided canyon carved by the Colorado River in Arizona, United States. The Grand Canyon is long, up to wide and attains a depth of over a m ...
on his 50th birthday, for $200m


Miscellaneous

The present
Lloyd's building The Lloyd's building (sometimes known as the Inside-Out Building) is the home of the insurance institution Lloyd's of London. It is located on the former site of East India House in Lime Street, in London's main financial district, the City of ...
, at 1 Lime Street, was designed by architect
Richard Rogers Richard George Rogers, Baron Rogers of Riverside (23 July 1933 – 18 December 2021) was a British architect noted for his modernist and Functionalism (architecture), functionalist designs in high-tech architecture. He was a senior partner a ...
and was completed in 1986. It stands on the site of the old Roman Forum. The 1925 building's facade survives, appearing strangely stranded with the modern building visible through the gates on the northern side on
Leadenhall Street __NOTOC__ Leadenhall Street () is a street in the City of London. It is about and links Cornhill, London, Cornhill in the west to Aldgate in the east. It was formerly the start of the A11 road (England), A11 road from London to Norwich, but th ...
. In 2011 it became a
listed building In the United Kingdom, a listed building or listed structure is one that has been placed on one of the four statutory lists maintained by Historic England in England, Historic Environment Scotland in Scotland, in Wales, and the Northern Irel ...
. In the main Underwriting Room of Lloyd's stands the ''Lutine'' bell, salvaged in 1858, which was rung when the fate of a ship "overdue" at its destination port became known. If the ship was safe, the bell would be rung twice; if it had sunk, the bell would be rung once. (This had the practical purpose of immediately stopping the sale or purchase of "overdue" reinsurance on that vessel.) Nowadays it is only rung for ceremonial purposes, such as the visit of a distinguished guest, or for the annual
Remembrance Day Remembrance Day (also known as Poppy Day owing to the tradition of wearing a remembrance poppy) is a memorial day observed in Commonwealth member states since the end of the First World War to honour armed forces members who have died in t ...
service and anniversaries of major world events. Brokers and underwriters are still normally held to, and apparently prefer, a more formal style of attire than many nearby City of London banks and financial institutions.


See also

*
BS 1088 In materials, BS 1088 is the British Standard specification for marine plywood that applies to plywood produced with untreated tropical hardwood veneers that have a set level of resistance to fungal attack. The plies are bonded with Weather Boil Pr ...
– Marine materials standard *
Jonathan's Coffee-House Jonathan's Coffee House was a significant meeting place in London in the 17th and 18th centuries, famous as the original site of the London Stock Exchange. The coffee house was opened around 1680 by Jonathan Miles in Change (or Exchange) Al ...
– original home of the
London Stock Exchange London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Pau ...
* Lloyd's Law Reports *
Lloyd's List ''Lloyd's List'' is one of the world's oldest continuously running journals, having provided weekly shipping news in London as early as 1734. It was published daily until 2013 (when the final print issue, number 60,850, was published), and is ...
*
Lloyd's Open Form The Lloyd's Open Form, formally "Lloyd's Standard Form of Salvage Agreement", and commonly referred to as the LOF, is a standard form contract for a proposed marine salvage operation. Originating in the late 19th century, the form is published b ...
*
Lloyd's Register Lloyd's Register Group Limited (LR) is a technical and professional services organisation and a maritime classification society, wholly owned by the Lloyd’s Register Foundation, a UK charity dedicated to research and education in science and ...
*
Lloyd's unlimited rating Lloyd's unlimited rating is a rating applied to hydroplanes competing for the water speed record, as applied by Lloyd's Register. It is usually denoted by a circular white badge on the hull, with an infinity Infinity is that which is bound ...
*
Shipping line A shipping line or shipping company is a company whose line of business is ownership and operation of ships. Shipping companies provide a method of distinguishing ships by different kinds of cargo: # Bulk cargo is a type of special cargo that is ...


References


Further reading

* Brown, Antony. ''Hazard Unlimited: The Story of Lloyd's of London''. Peter Davies, 1968. * Brown, Antony. ''Cuthbert Heath: The Maker of Modern Lloyds''.
David & Charles David & Charles Ltd is an English publishing company. It is the owner of the David & Charles imprint, which specialises in craft and lifestyle publishing. David and Charles Ltd acts as distributor for all David and Charles Ltd books and cont ...
, 1980. . * Carter, Robert L., and Peter Falush. "Lloyd’s of London" in ''The British Insurance Industry Since 1900'' (Palgrave Macmillan, 2009) pp. 126–134. * Duguid, Andrew. ''On the Brink: How a Crisis Transformed Lloyd's of London''.
Palgrave Macmillan Palgrave Macmillan is a British academic and trade publishing company headquartered in the London Borough of Camden. Its programme includes textbooks, journals, monographs, professional and reference works in print and online. It maintains off ...
, 2014. . * Flower, Raymond, and Michael Wynn. ''Lloyd's of London, an Illustrated History'' (1974) * Gibb, D. E. W. ''Lloyd's of London: A Study in Individualism'' (1972) * Herschaft, Jeremy A
"Not your average coffee shop: Lloyd's of London—a twenty-first-century primer on the history, structure, and future of the backbone of marine insurance"
''Tulane Maritime Law Journal'' 29 (2004): 169–185. * Lane, Nicholas
"The Origin of Lloyd's"
''History Today'' (Dec 1957) 7#12 pp. 848–853 * Raphael, Adam, ''Ultimate Risk: The Inside Story of the Lloyd's Catastrophe''.
Four Walls Eight Windows Four Walls Eight Windows was an American independent book publisher in New York City. Known as 4W8W or Four Walls, the company was notable for its dual commitment to progressive politics and adventurous, edgy literary fiction. History Four W ...
, 1994. .


External links

*
Lloyd's Agency Department

Special report on Lloyd's in ''The Economist'' (18 September 2004)



Independent analysis of Lloyd's

Association of Lloyd's Members



Data




Lloyd's of London's webcam



Commentary on Lloyd's
{{Authority control 1686 establishments in England British brands Economy of London Financial services companies established in the 17th century Insurance in the United Kingdom Organisations based in the City of London Organizations established in the 1680s Reinsurance