The role of lloyd’s in insurance

The role of Lloyd’s in insuranceChristine Finas | English Second Semester

2

ObjectiveExplore the 325 years of Lloyd’s history and understand

its role inside the world of insurance

3

Summary

The concepts of insurance, reinsurance and the functioning of Lloyd’s market.

The 325 years of Lloyd’s history.

The role of Lloyd’s in the management of some major catastrophes.

4

Part 1: Insurance, Reinsurance and Lloyd’s organization today

5

1. Insurance

What is “insurance”?

How has the insurance industry and the law of insurance evolved?

Insurer

Subscriber

6

1. Insurance

The Assurance Act of 1601

The Great Fire of London in 1666. Nicholas Brabon opens the first fire insurance office in England.

7

2. Reinsurance

Reinsurance is a kind of risk transfer.

Reinsurance was explicitly authorized in a law passed in Antwerp in 1609.

Stabilization

Catastrophe

8

3. Lloyd’s organization

The Risk Manager The Risk Manager The Local

Insurance Broker

The Local Insurance Broker

The Lloyd’s approved Broker (London)

The Lloyd’s approved Broker (London)

The under-writers (London)

The under-writers (London)

The managing agent

The managing agent

The Syndicates The Syndicates

The Members The Members

9

Part 2: The Extraordinary history of Lloyd’s

10

1. Lombard Street (1688-1774)

1734: It is the date of the first publication of Lloyd’s list

1764: The French-built Mills Frigate changed the course of the insurance law history.

1769: ‘the gambling den’

11

2. The Royal Exchange

(1774-1928)

In 1838 new premises at the Royal Exchange are destroyed by fire

12

3. Leadenhall Street and Lime street (1928-current days)

A shelter for people whose houses had been bombed.

1958: Lloyd’s moved to Lime Street

1965: Lloyd’s admitted for the first time foreign members.

1973: Liliana Archibald became the first female Lloyd’s broker.

“ I did not break down the barriers; they were broken down for me by the members of Lloyd’s in a very charming way. ” Liliana Archibald

13

Part 3: Important natural and human catastrophes insured

14

1. San Francisco earthquake

“pay all of our policyholders in full, irrespective of the terms of their policies.” Cuthbert Heath

At 5:12 am on Wednesday, April 18, 1906 an earthquake struck San Francisco.

Human death toll: 3000

Governments could not supply funds, so the costs are passed on to the insurers. Lloyd’s pays $50 Million in claims.

15

2. Titanic

On 14 April 1912 the Titanic, collided an iceberg.

Human death toll: more than 1 500 people died.

The ship was insured for over £1m by Lloyd’s.

16

3. The 9/11 terrorist attacks

The 9/11 terrorist attacks completely changed the world’s perception of risk. Indeed before 9/11.

The 9/11 terrorist attacks were Lloyd’s largest-ever single loss.

17

Conclusion

18

Thank you for your attention

19

[1] Bernstein Peter L, Against the Gods: the Remarkable Story of Risk. John Wiley & Sons, September 1996.

[2] Cockerell H. A.L, Lloyd’s of London: A Portrait.

[3] Holland David M. A Brief History of Reinsurance. Reinsurance News, February 2009.

[4] The 1936 American drama film, Lloyd’s of London, directed by Henry King.