Lloyd’s is a reinsurance and insurance market with its headquarters in London, United Kingdom. Unlike other insurance firms, Lloyd’s is a unique in that it operates like syndicate bringing different people together to insure businesses and organization. Its operations are guided by the Acts of Parliament and Lloyd’s Act 1871, which allows it to run as a partially-mutualized industry. Lloyd’s was created in 1688 by Edward Lloyd’s in his coffee house that was situated on Tower Street (Kagan, 2018). The coffee house was used to gather informal meetings in order to do business transactions with all kinds of people such as merchants, bankers and seafarers (Leonard, 2016). Moreover, underwriters would mostly come to have their meetings in the coffee house with those who wanted a premium and insurance on their ships.
Later in 1928, Lloyd’s relocated to Leadenhall Street, a new building adjoining Leadenhall market. On the other hand, the association formed by the underwriters in 1774 moved into a new building located on Lime Street. The building in which the Lloyd’s relocated to was a dramatic structure with a soaring interior atrium (Kagan, 2018). The Llyod’s was able to acquire power for making its new bylaws, acquiring its own properties and using the name of the corporate to conduct all acts in 1871. Affairs of the union created by the underwriters by its committee were consolidated by Lloyd’s Act. However, it was only limited to marine coverage, but this changed during the Act of 1911 where insurance of every description was carried out. This Act was later changed in 1982 due to a series of Scandal, bringing several changes.
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A syndicate system was created in order to take care of the increasing values which were insured in the 1900s. The system was modified as such a way that the insurance risks were able to be spread through many people. During this period, there were challenges that the system faced, including 80 per cent personal losses (Kagan, 2018). Investors from different companies and institutions were allowed by Lloyd’s to take place in its underwriting business as their first experience during the same year. Financial Services Authority initiated an oversight of the Lloyd’s of London during 1998. Finally, Berkshire Hathaway, an American holding company, arranged a bailout plan of $7 million due to the serious liabilities in Lloyd’s (Kagan, 2018. In conclusion, Lloyd's has existed for over 330 years to become the leading market for expert insurance worldwide.
References
Kagan, J. (2018). Lloyd's of London. Investopedia . Retrieved on 4 November 2019, from https://www.investopedia.com/terms/l/lloyds-london.asp
Leonard A.B. (2016) Introduction: the Nature and Study of Marine Insurance. In Leonard A.B. (eds) Marine Insurance (pp.1-3).London: Palgrave Macmillan.
