Chapter 16: Roles and Responsibilities

History of Insurance

Lloyd's of London

Back in 1688, a man by the name of Edward Lloyd kept a coffeehouse in London where individuals could insure ships and their cargo. These individuals were among the first underwriters in the new insurance industry. This was the start of what later became Lloyd's of London, an insurance marketing association that is well-known today.

In the late 1600s, coffee became a popular drink in England, and coffeehouses began popping up everywhere. Edward Lloyd's coffeehouse became a favorite meeting place for ship's captains, ship owners, and merchants. People who were willing to insure ships' cargo in return for a premium began to transact business at Lloyd's. It is said they were called "underwriters" because these individuals would sign their names under an amount of risk they were willing to accept for a specific premium.

Several underwriters from Lloyd's coffeehouse eventually set up shop to write insurance policies. This early group eventually grew into Lloyd's of London. Lloyd's remains a significant force in the insurance industry today. It is known to be among the first to issue policies for unusual or complex risks. Lloyd's covers oil rigs, sporting events, and even celebrity body parts. In 2009, Lloyd's issued a policy covering the tongue of an owner of a coffee company who tastes every batch of raw coffee beans before they are shipped to stores.