Lloyd’s: Its History and Business Practices

From the 1680s, customers of Edward Lloyd’s coffee house in the City of London began transacting marine insurance for England’s growing seaborne trade. Initially, they wrote insurance on their own behalf, each assuming part of the risk of a ship’s hull or cargo on any given voyage. During the following centuries, Lloyd’s underwriters associated together as a society, but continued to write insurance on an individual basis with unlimited personal liability. As risk values rose with technological and economic development, individuals began to group in syndicates, with some actively underwriting on behalf of the non-working members of their syndicate. Lloyd’s diversified into other areas, such as motor and aviation insurance. Underwriting and broking functions also separated, and large broking firms began to acquire control over syndicates. The latter development gave rise to conflicts of interest that eventually helped to undermine the traditional organisation of Lloyd’s.