Having Tea with Royalty—Lloyd’s of London
I finally did it! Here I am at Lloyd’s at the Rostrum in the center of the Lloyd’s Underwriting Room in front of the famous Lutine Bell.
It is hard to believe, but I have never been to Lloyd’s of London. I have written about it for years and never had the opportunity to take a tour of Lloyd’s. It finally happened thanks to former Aon Holdings Chairwoman Marguerite Soeteman Reijen, a private tour was set up with Philip McCarthy, PA to Head of Strategy & Innovation, PA to Lloyd’s of London.
For someone who is as enthusiastic about insurance as I am, the experience was overwhelming. Philip McCarthy told me lots of stories. I was taken with the one about a maritime disaster involving the HMS Lutine and another about the 1906 San Francisco Earthquake and Fire.
The Lutine Bell
In 1799, Hamburg was near collapse because of the French Revolutionary War. Merchants in the City of London collected 1m pounds in gold and silver bullion to be loaned to Hamburg. It was rumored that the ship also carried the Dutch crown jewels enroute from repair in London. Lloyd’s underwriters insured the ship’s cargo. On October 9, the HMS Lutine encountered a heavy storm. The Lutine ran aground with the loss of all crew and treasure. The claim was paid in full. In 1859, the Lutine Bell was salvaged and returned to Lloyd’s, where it hangs in the Rostrum in the center of the Underwriting Room.
After a crack appeared in the bell, it was decided to retire the bell from daily use. The bell was rung once at the sinking of the Bismark during World War II. It rang once on 9/11 following the terrorist attack on the U.S., once at the death of Princess Diana, and once at Queen Elizabeth II’s death. The bell was run twice to mark the accession of King Charles III And that is me in front of the Lutine Bell in the attached photo! No, the Lutine bell was not rung to celebrate my visit to Lloyd’s or London!
The San Francisco Earthquake and Fire
The San Francisco Earthquake and Fire is important to the history of Lloyd’s and has had an impact on the insurance business today. In the early years of the 1900s, when disasters occurred, governments played no role in supplying relief funds. The burden of losses fell to individuals and insurers if the individuals were insured.
Enter an especially interesting person: Cuthbert Heath, a British insurance businessman, underwriter, broker, and syndicate owner at Lloyd’s of London from 1880 to 1939. Heath and his syndicate had insured aggressively in San Francisco, ending up covering about 20% of the total policy holders in San Francisco.
The earthquake and resulting fires destroyed over 80% of San Francisco, killing thousands of people, and leaving half the population homeless. Few residents of the city had earthquake insurance although many had fire insurance policies. Some insurers—most German and Austrian—simply denied all coverage. Others said they would pay only 75% of the fire damages, leading to numerous lawsuits from policyholders. When Heath heard about the earthquake and devastating fires, he cabled his San Francisco agent to:
“Pay all of our policyholders in full, irrespective of the terms of their policies.”
Heath is credited with establishing Lloyd’s reputation in the US and worldwide by his immediate response to the devastating 1906 San Francisco earthquake and fire. He is an incredibly interesting person and is referred to in history as “a relentless innovator, novel risk-taker”, “the maker of modern Lloyd’s”, and the “father of non-marine insurance at Lloyd’s”. Briefly, Heath sold his first Lloyd’s auto insurance policy in 1907 to American drivers, sold his first fleet coverage to a meat-packing company in Chicago, pioneered Lloyd’s fire business, and practically all the miscellaneous classes of insurance.
Cuthbert Heath died in 1938. In its memorial tribute, The Economist called him “the first man to see the potentialities of insurance in the modern world. There are few departments of our modern life which have not been touched by his inventive genius. He had in him every element of greatness—intellect, character, vision, courage, and a deep personal humility.”(1)
Source:
(1) "Finance and Banking". The Economist. 11 March 1939. p. 510.