• September 8, 2009 3:47 am
  • Rick McCord
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A Visit to London

I recently made my first visit to London.  For several years our firm has handled the claims for a number of programs underwritten in London, and deal regularly with brokers and program managers located both in the U.S. and U.K.  However, this was my first opportunity to travel to England in person, and I had a chance to meet a number of brokers and others involved in the insurance industry there.

One of the highlights was a visit to Lloyd’s, and an informal tour of the place by a London broker and friend.

Many of us in the industry have heard the story of the earliest recorded use of something like insurance.  According to many sources, ancient Chinese merchants would arrange to divide up their goods amongst themselves when traveling on dangerous rivers.  Each would carry only a portion of his own wares in his boat, along with portions of the other merchants’ commodities, so that if one boat were to sink each businessman would lose only a relatively small part of his possessions.  By sharing the risk among themselves they each had some measure of protection against being totally wiped out by a single disaster.

Most sources also agree that while the concept may have been around much earlier, it was the businessmen associated with Lloyds who perfected the modern business of insurance.

By the late 1600’s London had become a center for trade and shipping worldwide.  It is said that in 1688 Edward Lloyd opened Lloyd’s Coffee House in Tower Street in London, and it became an informal meeting place for the conducting of business transactions.  A merchant with a ship or cargo to insure would retain a “broker” to carry the written details of the risk around to various wealthy businessmen, who would in turn write upon this “slip” the particular percentage of the risk for which each was willing to be responsible.  Each of these “underwriters” wrote his name and agreed percentage below the outline of the voyage until the risk was fully covered.

Eventually over a period of time the process became more formalized among brokers and underwriters, and their gathering place was relocated several times to larger quarters, but the name “Lloyd’s” has remained.

Naturally, today much of the work is done electronically.  Nevertheless, there is a huge amount of tradition that remains.  It was very interesting to visit the main floors where the underwriters sit in their “boxes”, being visited by brokers with new offerings or details of losses on existing accounts.  Some underwriters focus on property or specific casualty risks, while others are involved with specialty areas such as fine arts or even communication satellites, and of course there are still those whose work involves the age old shipping risks.  I was somewhat surprised to see that paper “slips” are still used to record the underwriters and their respective percentages of the risk.

In the middle of the whole bustling place sits the famous Lutine Bell, salvaged from a ship that sank in 1799 (the claim for the lost cargo was insured by and paid in full by Lloyd’s underwriters), and traditionally rung to announce important news, both good and bad.  I understand that it was rung following the terrorist attacks on 9/11/01.

I didn’t have a chance to do much visiting of tourist sites on this London trip, but certainly hope to do more of that next time.  The chance to visit Lloyd’s, and see what truly has to be considered one of the foundations of modern insurance, was one that I hope to do again.

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