The legendary Lloyd’s of London stands as a historical symbol for the insurance industry of the probability of risk and of the security that insurance provides to those under duress. The important business of insurance is a simple concept that was born out of the likelihood of a company or person to suffer an unforeseen loss and the chance for them to mitigate the consequences related to that loss. As one of the first insurance companies, Lloyd’s continues to remain a pillar of modern-day insurance practices, which has established it as the definitive conglomeration of expert underwriters and brokers. This has created a reputation for Lloyd’s that precedes itself as the deification of respectability within the insurance industry and as a monument for all those who work in it.
James DeRosa, Founder/Chairman of JDi Data, was recently granted a visit to the remarkable Lloyd’s of London headquarters. Tours are typically reserved for those who work specifically in the insurance industry. Fortunately, JDi Data is a technology company with over 20 years of experience developing solutions that optimize the insurance process, while encompassing all aspects of policy creation and assignments. Due to this, Mr. DeRosa was given an exclusive tour by Endeavour Insurance, a well-respected company that has close affiliations to Lloyd’s of London as one of the largest official independent Brokers, enabling them to give a first-hand ride through more than 300 years of industry insight.
Lloyd’s of London has a variegated and deep-rooted record of producing extremely large and unique insurance policies that have been backed by the most esteemed underwriters. The company’s inception dates back to 1688 when Edward Lloyd’s coffee house became the go-to location for receiving marine insurance. This allowed the company to quickly develop a reputation for brokering honest policies. In 1734, Lloyd’s List was first published as the definitive source of reliable information for merchants, underwriters, and all others who would regularly congregate at the coffee house. Today, the publication stands as one of the longest running journals, and has successfully evolved into the digital realm as a constantly updated news source for market data, logistics, research, and all other relevant industry information.
However, Lloyd’s of London’s great success at becoming England’s most reputable insurer is not because of their extensive knowledge, their ability to assess risk, or their repute for producing fair policies; instead, it’s because of their ability to fully payout their policies with no dispute. This reliability has been repeatedly tested time and again, and Lloyd’s has constantly delivered on all of their payouts in an expeditious manner, effectively minimizing the aftereffects often connected to disastrous scenarios. This proficiency is dated back to one of the earliest and biggest losses in Lloyd’s history, which resulted from the unfortunate foundering of the HMS Lutine.
The Loss of the Lutine Treasure
The HMS Lutine was a French Navy Magicienne-class frigate (the largest type of warship) that was outfitted with 32 cannons and came under British control in 1793. In 1799, the HMS Lutine was destined for the port of Hamburg with a vast supply of gold, silver, and (rumored) crown jewels as a relief effort to prevent the German economy from sinking. Unfortunately, the Lutine got stuck in a heavy gale off of the Dutch coast and never made it to port. The ship went down and lost all but one of its 240 passengers. Within two weeks, Lloyd’s had paid the policy in full and had cemented their reputation for paying out valid claims. Although no one knows the exact value of the lost cargo, it was reported that the ships treasure was equal to around £1,000,000 at the time.
Salvage efforts were continuously made for the lost Lutine treasure, but due to shifting sandbanks over 80 percent still remains scattered across the ocean floor. In 1858, the 106-pound Lutine bell was rescued from its watery grave and brought back to England. Thus far, it remains the greatest recovery to have developed since the massive loss. After its discovery, the bell was taken to Lloyd’s of London and hung in the underwriting room as a news relay for updates on invested ships. It would be rung once in the event of a confirmed loss, and rung twice for a vessel’s safe return. Today, the bell stands tall in the present Lloyd’s of London headquarters and is still occasionally used for ceremonial purposes.
Another Ship Lost
Although the events of the HMS Lutine stand as one of Lloyd’s most famed losses, it still does not equal the immense tragedy of the drowned Titanic. At the time, the Titanic was the world’s largest and most luxurious ship ever built. Thusly, the boat had an incredible policy leveraged against it with £1,000,000 secured for the hull alone. Due to the supposedly ‘unsinkable’ nature of the ship, Lloyd’s insured it for an unbeatable £7,500 premium. Regrettably, in 1912, the Titanic went under on its first voyage and lost more than half (1,514) of its passengers to the icy arctic waters; in addition to an unknown number of precious jewels and treasures that the wealthy had brought aboard. The sinking of the Titanic created the largest loss the market had seen. Nevertheless, Lloyd’s honored all of its debt and completely paid off the amount owed within 30 days of the tragedy.
A New Type of Risk
In modern times, the prestigious Lloyd’s of London continues to lead the way on how the insurance industry manages disasters. On September 11, 2001, terrorist attacks forever changed the way that risk was assessed. The attack and subsequent collapse of the twin towers was the first time that so many insurance classes (property, casualty, fine art, etc.) were affected from a single incident. Luckily, Lloyd’s was immediately present to provide support in the aftermath of the disaster. This led to U.S. Treasury Secretary, John Snow, to give an official ‘thank-you’ to Lloyd’s of London for their timely assistance. Other modern catastrophes include the 2004-05 hurricane seasons where Lloyd’s paid out billions in damages from the battering of successive storms (Charlie, Frances, Ivan, Jeanne, and Katrina). Not only that, but they also donated millions to disaster relief funds and deployed rescue teams to assist in ameliorating the ramifications of the devastating hurricanes.
The Evolution of Insurance
Today, Lloyd’s of London continues to pioneer new forms of insurance, setting the example as the current leader of the best underwriters and brokers in the market. This has enabled them to be the first company to insure a celebrity body part, as well as airplanes, and automobiles. The rapidity of their response to disaster remains the standard for all companies to strive for. Meanwhile, their honor has preserved them a respectable legacy that is immediately seen in the magnificent architecture of their London based headquarters. What is more, is that Lloyd’s continues to stand as a pillar of inspiration and ingenuity for those within the insurance community.
JDi Data is proud to be a part of the insurance industry’s extensive history, and has repeatedly used the examples set by Lloyd’s for professionalism, promptness, and follow-through as inspiration for the ways we conduct business. In doing so, we have developed innovative solutions —Claims Manager™ and Policy Administrator™ — that are everything a company needs to efficiently assess, create, assign, and handle all lines of insurance claims. Policy Administrator™, in particular, was specifically designed as a comprehensive tool for underwriters to provide the foundations needed to effectively communicate, track quotes, and instantly report on loss ratio. This has resulted in a product that embodies the admirable spirit of Lloyd’s of London, produces real results in a professional manner, and promises to take care of its clients with the same dedication and allegiance that has become synonymous with the very best of the insurance industry.