Lloyd's of London
Lloyd's of London , based in London, is an international insurance market. Unlike its competitors in the insurance and reinsurance business , Lloyd 's of London is not a company or corporation , but an exchange trading in insurance.
Apart from their mutual beginnings in Lloyd's coffee house, Lloyd's of London has no connection with Lloyd's Register of Shipping , a shipping register and a classification society .
history
The beginning of Lloyd's was a coffee house , which was run by Edward Lloyd (first mentioned in an advertisement in the London Gazette of February 18, 1688) first in London's Tower Street, then in Lombard Street . Like other coffee houses, Lloyd's became a meeting place for business people, including those willing to cover risks in the shipping sector . It became a common practice to look for an insurance provider in the coffeehouse as there was more than one provider to be found there. This became all the more attractive when in 1720 the granting of rights created a de facto monopoly in the field of insurance companies, making private insurers an important alternative. Edward Lloyd died in 1713, the coffee house continued under the name Lloyd's.
In the 18th century, Lloyd's developed into a center for private insurance. The transformation of the coffee house into a company began around 1811. B. Founding agencies and defining their tasks. From 1774 to 1928, Lloyd's resided in the Royal Exchange . In 1871 the business operations of Lloyd's of London were regulated by law (Lloyd's Act). The focus is on the individual commitment of the insurer.
The institution has been based in its own premises since 1928. The current building, erected from 1978 to 1986, is a creation of the architect Richard Rogers . The Committee Room on the 11th floor designed by Robert Adam , however, dates from 1763. It was transferred brick by brick to the futuristic tower block by Rogers.
Lloyd's as an insurance market
Contract partner
On the one hand there are the policyholders , originally exclusively ship owners , who are responsible for a risk - e.g. B. in the event of a ship sinking - pay premiums. On the other hand are the names , the insurers, so to speak. If the contractually defined loss event occurs, for example if a ship insured by Lloyd's sinks, the policyholders are compensated from the private assets of the Names up to the contractual amount.
As Names are called investors in the insurance business. You pledge your private assets (are personally liable, hence the name) in a certain amount for certain risks, e.g. B. individual ships. The advantage of this investment is that the Names can continue to use their risk capital - as long as the damage does not occur: real estate can continue to generate rental income in addition to the insurance premiums, cash can still be invested.
Code
A code is intended to protect the claims of both sides: The names must be protected from impoverishment even in the event of damage, the claims of the policyholders must not be endangered by parallel transactions of the names . Originally this was done through social selection: Names had to have sufficient cash assets.
With the increased demand for insurance in the 20th century, the rules became more complicated; theoretically everyone could soon become a name . A code of rules was created to protect both sides: Lloyd's only accepts one's own house as security if the name is protected against homelessness in the event of damage. On the other hand, the name must not jeopardize collateral such as cash through high-risk speculation.
Syndicates
Within Lloyd's, the business was divided into numerous syndicates, which act like competing insurance companies side by side. In order to create competence centers, the syndicates have specialized in areas such as aviation , ships , building insurance , reinsurance, etc.
In the interests of diversification , Names have pledged their assets to different syndicates for different projects. At the same time, high risk sums (as with multi-billion dollar oil rigs), which could not be covered by the names of individual syndicates, required complex chains of reinsurance contracts between syndicates, so that the names could no longer understand the risks for which they were liable.
When the Piper Alpha oil rig had to be booked as a total loss after a fire in 1988, the need for reform at Lloyd's became apparent: The existing chain of reinsurance led to the totality of the syndicates having to write off several times the actual loss as a result of the accident. The major loss also led to a review of the partly outdated procedures at Lloyd's. Until then, insurance relationships were still handwritten in the books, which reduced transparency.
Web links
- Lloyd's of London lloyds.com
- German branch lloyds.com
Individual evidence
- ^ Lloyds Register of Shipping (Ed.): Annals of Lloyd's Register - Being a Sketch of the Origin, Constitution, and Progress of Lloyd's Register of British & Foreign Shipping . 1st edition. Lloyds Register of Shipping, London 1884 (p. 3).