Maritime Insurance:
Lloyd’s of London
Lloyds of London Original Façade from the 17th
Century. http://www.portcities.org.uk/london/server/show/conMediaFile.1129/Lloyds-Coffee-House-frontage-On-loan-from-Lloyds-of-London.html
Insurance arose as the way to accommodate for risk, for the insured, and at the same time, as another means to make money for the investors who provided the insurance. Insurance, particularly shipping insurance, was crucial in the development of the British economy and the creation of an empire, encouraging and supporting maritime ventures. London was a natural and powerful port and had a long history of being a trading center since Roman times. For the British economy to develop, it was crucial that it expand trade and commerce beyond its shores. Businessmen and investors of shipping ventures needed some way of reducing the risks that came with the danger of crossing seas and oceans. Shipping insurance made the ventures more possible and therefore, encouraged more trading in foreign ports and more exploration of new places, expanding the empire.
Lloyd’s of London is a good example of how such insurance began and what role it played in England and London’s economy. In 1688 Lloyd’s Coffee House opened on Tower Street and became a place where many businessmen congregated. It became well known as a trustworthy place for business and information regarding shipping and maritime insurance. Edward Lloyd, the founder, published a weekly newsletter called “Ships Arrived at and Departed from several Ports of England, as I have Account of them in London [and] an Account of what English Shipping and Foreign ships for England, I hear of in Foreign Ports”. Over the years, Lloyds came to specialize in shipping insurance. Lloyd’s List became the first daily newspaper in the country. [1] The number of people who began to do business there increased. The need for insurance increased, and it finally became necessary, as it did with the stock market, to find a way to regulate the trustworthiness of the insurance transactions. So in 1769 a group of reputable businessmen from Lloyd’s broke off and founded a new area on Popes Head Alley. It became known as ‘New Lloyd’s Coffee House’ and when in 1774 the subscribers found that the new building was too small, they all paid 100 pounds, using this money to establish a large enough leased space in the Royal Exchange. The establishment became more exclusive and slowly evolved into a society of underwriters. Membership became restricted and significant. Members began to be regulated and an elected governing committee was formed. Finally in 1871, Lloyd’s was incorporated by an Act of Parliament, providing a legal basis and newfound power. There was backing from parliament allowed the members of Lloyd’s to acquire property and make byelaws. [2]
The importance of Lloyd’s of London and its role in the British economy and the economy of London and for maritime happenings was immense. The combination of the new ways of dispersing risk in shipping and trading ventures through joint stock companies and maritime insurance all allowed for a rapid expansion of English shipping, trade, and exploration to far reaches of the globe where the voyages were fraught with peril. Lloyd’s also provided maritime insurance in times of war, reducing risk in that enterprise as well, and bringing in money to the economy through its investments in insurance. The risk-reducing enterprises allowed for a more complete expansion and set of enterprises and furthered the development of the English empire.