What is Lloyds of London?

Lloyd’s of London, also known as just Lloyd’s, is an insurance and reinsurance market based in London. It is not an insurance company, instead, it is a marketplace where insurance buyers and sellers come together. It essentially acts as a market regulator which sets rules under which its members operate.

Based on Lime Street in Central London, Lloyd’s originally began as a coffee house in the 1600s. The coffee house became popular with sailors, merchants and ship-owners as Lloyds would offer them reliable shipping news.

Lloyd’s then became known as the place to obtain marine insurance: for everyone from entrepreneurs trading overseas, to explorers setting out on new voyages, but also for those involved in the slave economy – a role for which Lloyd’s apologised in 2020.

In 1691, a small group of marine insurers relocated to Lombard Street and in 1713, the participating members of the insurance arrangement formed a committee called The Society of Lloyd’s. And so Lloyd’s of London was born.

What is the Lloyds Act?

One of the key things that sets Lloyd’s apart is that it is governed by the Lloyds Act of 1871 and subsequent Acts of Parliament.

The first act was passed in 1871 and gave it sound legal footing as a market for insurers to ‘syndicate’ risk. However, at this time it was unusual for a Lloyd’s syndicate to have more than five or six backers, and it meant that they were losing business to other larger insurers. Frederick Marten, a marine underwriter, created the first “large syndicate” which was initially 12 capacity providers. This syndicate soon became larger and outgrew many major insurance companies outside of Lloyd’s.

Another Lloyd’s Act in 1911 set out the Society’s objectives including the promotion of its members’ interests and the collection of information.

Lloyd’s of London is the oldest continuously active insurance marketplace in the world. There were subsequent Lloyd’s Acts and it continues to be governed under the Acts of 1871 through to 1982.

How is Lloyd’s split up?

Today, Lloyd’s is the largest insurance market in the world, transacting over £50 billion of risks every year from natural disasters to cyber attacks. Lloyd’s oversees the management and supervision of the market. It has five key participants: syndicates, managing agents, brokers, coverholders and insurance buyers.

What are syndicates?

Syndicates function like small insurance companies. They assume risks and pay claims. Each syndicate is made up of one or more members, of which can either be individuals or corporations. These members provide financial capital that allows the syndicate to operate. They then assume risk, but only a percentage of that risk. This can vary in size, but can be up to 50% of the overall risk.

Each syndicate specialises in a certain type of risk, for example insuring aviation, space or fine art.

Who are managing agents?

Managing agents are responsible for the hiring and overseeing all essential staff, including the underwriter and accountants, as well as managing their daily operations.

Who are brokers?

The brokers at Lloyd’s act like all brokers and work independently to arrange deals between clients and insurers. They also advise clients on the most appropriate policies for them.

Brokers at Lloyd’s match the appropriate syndicate to the buyer, and must be approved by the Corporation of Lloyd’s to be allowed to work in the marketplace.

Who are coverholders?

The coverholders are the companies that underwrite insurance policies for managing agents. These work outside of Lloyd’s and do business that isn’t done by brokers. Coverholders allow Lloyd’s to operate globally and are given specific authority to transact certain business in the marketplace.

Who are insurance buyers?

The insurance buyers are the individuals and corporations buying the insurance. If a traditional insurance provider does not provide the insurance you need – particularly on large and complex risks – you will be able to find insurance sellers at Lloyd’s. It’s why satellite launches, sporting events and even singers’ vocal chords are regularly insured in the Lloyd’s market.

Does Lloyd’s recruit graduates?

Now you know what Lloyd’s is, what it does and who the key players are… do they recruit graduates?

Lloyd’s does offer graduate programmes for those looking to pursue a career in insurance. There are core programmes spanning insurance, business, actuarial, markets, member services, tax and internal audit – many of which involve internal or external rotations enabling you to choose which area you want to work in.

Do Lloyd’s recruit school leavers?

If university isn’t for you then you may be interested in the Lloyd’s Apprenticeship Programme. There are two schemes, Business and Insurance, which range from between 21 months and three years in length.

In conclusion, Lloyd’s is a marketplace for large and complex risks that sets the standard for insurance companies and is regulated by the government. It is not an insurance company, but instead is a global hub for insurers placing their risks.