Who was Lloyd in Lloyd’s of London? His name was Edward Lloyd, and he ran a coffee house in London in the late 17th and early 18th centuries.
Lloyd’s of London is very famous, and the name often comes up with major disasters. However, Lloyd’s of London is not an insurance company. Rather, it is an insurance marketplace.
If I want to insure my car, I approach an insurance company. They look at the cost of the car, where I live, my age, my sex, and a load of other factors before giving me a quote for how much I will have to pay. I pay them the money, and they take it and invest it. If I drive my car without an accident and sell it, the insurance company has made money. If I crash and they have to pay out, they have lost some money, but they may still have made some money investing my premiums. Overall, with all of the policies they hold, they will pay out on some and not on others, making a profit in the long run. That is an insurance company.
If I want to insure an oil rig, it becomes much more difficult than just insuring a car because it is vastly more expensive. A single insurance company would not be able to shoulder that much risk alone. At Lloyd’s of London, lots of insurance companies can come together and make syndicates where they share the risk. One company might insure my car, but five companies might insure an oil rig for 20 percent each. Lloyd’s of London is a place where people looking for insurance can find syndicates, and syndicates looking for customers can find them. Lloyd’s of London is famous because it insures extremely expensive or unusual things. We usually only hear about it when there is an enormous disaster, such as an oil rig catching fire or a hurricane causing huge losses.
So, who is the Lloyd in Lloyd’s of London? His name was Edward Lloyd, and he lived from 1648 to 1713 in London. When he was about 35 years old, he opened a coffee house on Great Tower Street in London. Coffee had only been introduced to England about thirty years earlier, and coffee houses were a growing trend. By 1675, there were over 3,000 coffee houses in England. They became frequented by educated people and gained the nickname of penny universities. In France, many revolutionary ideas were discussed in coffee houses. A lot of business was also run out of coffee houses, and Lloyd’s was one of them.
Several coffee houses became associated with specific trades because of where they were located. Coffee houses near the law courts were known for their lawyers, and coffee houses near the goldsmiths’ quarter were known for their goldsmiths. Lloyd’s coffee house on Great Tower Street was very close to the River Thames and the Port of London. Sailors, captains, shipowners, merchants, and other people involved in the shipping trade stopped in on their way to or from work. It became associated with the shipping industry.
As more and more people from the shipping industry came, Edward Lloyd started to pick up information from them and announce shipping news in his coffee house. He moved to a larger coffee house in 1691 to deal with the increased trade. He had a pulpit in his new coffee house where shipping news could be read to his customers, and sometimes he held auctions there as well. Then he started to produce shipping news in newsletter form in a weekly publication called Lloyd’s List. This list still exists today, although it is produced digitally now.
It became known as the place to go for shipping information, but also the place to insure ships. Edward Lloyd even rented out some of his tables to people who insured ships and cargoes. Then, as it began to grow, it became the main place for marine insurance, and it continued to expand. Edward Lloyd died, but the market that had grown around his coffee house continued without him. As it moved into the 19th century, Lloyd’s went from being a collection of people and businesses in the same place to a much more organized and trustworthy enterprise. It became bigger and had larger syndicates, which meant it could insure risks that other organizations could not. Lloyd’s also became famous for paying out after disasters, such as the Titanic, while some other insurers tried to avoid losing money. This increased its reputation.
Today, Lloyd’s is an enormous institution and has moved away from being a solely maritime insurance market. It will insure pretty much anything. And this is what I learned today.
Sources
https://www.investopedia.com/terms/l/lloyds-london.asp
https://www.vertafore.com/resources/blog/understanding-insurance-what-lloyds-london
https://www.lloyds.com/about-lloyds
https://en.wikipedia.org/wiki/Lloyd%27s_of_London
By The Corporation of Lloyd’s – [1], Public Domain, https://en.wikipedia.org/w/index.php?curid=37293214
https://en.wikipedia.org/wiki/Edward_Lloyd_(coffee_house_owner)