The placement slip for the Titanic and her sister ship the Olympic.
Lloyd’ s of London: How coffee, ships and a simple newsletter brought about a worldwide industry
by Colin Davidson
T he birth of Lloyd’ s can be traced back to the year 1688, to a coffee house on Tower Street in London, owned and operated by Edward Lloyd.
The proximity of the coffee house to the River Thames and the London dock area meant that Lloyd’ s establishment was frequented by those involved in the shipping industry such as ship-owners, captains, sailors, merchants, and bankers. At the time this was a major center of trade in Europe. Consequently, a vast majority of Lloyd’ s clientele visited Lloyd’ s establishment not only to drink coffee, but also to conduct insurance deals amongst themselves.
Although he owned the coffee house, Lloyd was not otherwise involved in the shipping or insurance industries. His business existed to provide his patrons with a comfortable place to drink coffee, which at that time was a very popular and newly discovered beverage. The pleasant atmosphere leant itself to being a primary meeting place for business discussions. The insurance business started to grow in real when customers of the coffee house each began to accept, for a fee, a share of a particular insurance risk. They would do this by signing their names one under the other on a contract next to a column that showed the portion of the risk they would accept. The system of signing their names one under another on the contract led to the coining of the term“ underwriter.”
Without today’ s technology, the only way to know whether ships arrived safely at foreign ports or if there
was a lost vessel was via word-of-mouth communication from returning mariners. Edward Lloyd realized that this information was extremely important in many ways to his customers. He started to glean this kind of data from all of his customers and put together a newsletter publicizing the information he had gathered. This newsletter, called Lloyd’ s List, is still in existence, and today it is the leading newspaper read by people in the shipping industry. As time went on Lloyd’ s coffee house became very popular with everyone involved in the new shipping and insurance industries. They were all looking for as much information as possible in order to be able to write insurance on a profitable basis.
Around this time customers of the coffee house got together and formed The Society for the Register of Shipping. The register’ s function was to survey the hull and equipment of all ships, including those under construction, and classify them according to their seaworthiness. The information gathered by the surveys was entered into the register and was available to all members of the Society. It is interesting to note that the highest classification a ship could be given in the registry was A1. To this day“ A1” is still used as a symbol of quality.
Around the period between 1799 and 1833 many disputes arose regarding the classification process. Additionally there were many disagreements about a rival facility that had begun competing for business. Competition between the two facilities eventually caused both to run into serious financial problems. In order to survive, in 1834 the two
10 KANSAS INSURANCE AGENT & BROKER | JULY- AUGUST 2016 |