Behind the Curtain at Lloyd’s of London

Posted in: Risk Management Consulting

Lloyd’s of London has been featured in movies, in TV shows, and used as a general pop-culture reference since its inception in 1688. But do you really know what Lloyd’s is, how it works, and how it’s different from a typical insurance company? In my 25 years’ experience working in the large commercial insurance industry, I’ve had the opportunity to place risk with this famous insurance institution and to experience its culture.

What Makes Lloyd’s Different?

Beyond insuring high-profile items such as celebrities’ voices, legs, and hair, the British insurance market specialist also insures “everyday” items and events—albeit everyday items other companies wouldn’t dare touch. Not every request falls under what a traditional insurance company will cover. Sometimes there are situations that many a conventional insurance company will find too risky to insure—for example, an individual being deployed to war, a spacecraft, satellite, or war plane. Lloyd’s, on the other hand, has insured situations such as the chance of snow on a certain day or the chance that the Loch Ness Monster were to be captured. Lloyd’s has even insured a famous Dutch winemaker’s nose and entire weddings (against guests getting hurt on the dance floor, suffering from food poisoning, or the bride having a change of heart)! All are cases that feasibly warrant the need for insurance but that most companies would turn down.

There’s quite a divergence between standard insurance companies and a company such as Lloyd’s. The main difference—and the reason Lloyd’s can be as flexible and adventurous in accepting risks—is that, unlike conventional insurance, Lloyd’s is not in fact an insurance company at all. Instead, it’s a marketplace for members (both individuals and corporations) interested in insuring against risk. Its members alone assess whether a risk is worth taking—in other words, virtually nothing is completely out of the question. Most insurance companies are responsible to a board, to stockholders, or even at times, to a bank. In comparison, Lloyd’s has only its members and British regulators to whom it must answer. If the syndicates agree a risk is worthwhile, then the request can be filled and the object insured, no matter what it may be.

Behind the Curtain at Lloyd’s

These characteristics certainly make Lloyd’s different from an insurance perspective—but I can tell you from personal experience, Lloyd’s may be an epic company, but the human touch is what makes Lloyd’s so special. Traveling to the iconic building on Lime Street for face-to-face meetings in the underwriting room is unlike any other insurance negotiation on earth. To glimpse the famous loss books in which Lloyd’s keeps its records—and still uses an old-fashioned quill pen to do so—is a reflection of the tradition that is the heart of Lloyd’s. Or to see the legendary bell from the HMS Lutine, a ship that Lloyd’s insured, that hangs in the halls of Lloyd’s is breathtaking. No words can describe the rich slice of history I’ve experienced in my years of dealing with Lloyd’s of London.

What Lloyd’s Does

World trade and economic development are high on the list of items that Lloyd’s values, but Lloyd’s members do not accept risks just because they are out-of-the-box or unusual. There are cases they do find uninsurable such as certain financial guarantees, which are considered business risks.

In the past, Lloyd’s dealt primarily in European and American markets, but recently, Lloyd’s has begun to expand its services worldwide. Lloyd’s has developed a large presence in China with satellite offices in Shanghai. Lloyd’s even works “out of this world”—it is the first and only insurer of Richard Branson’s Virgin Galactic private spaceship.

With no risk considered absolutely too risky and only its members to consult with, Lloyd’s clearly has the corner on the unusual insurance market, but some might wonder how a specialized insurance market such as Lloyd’s can benefit the average policyholder. It’s important to remember that, while Lloyd’s of London does insure the extraordinary, that is not exclusively the type of business it will accept. At its core, Lloyd’s is a business built from the bottom up for 324 years. In its long history, seven main categories of coverage have shaped and sustained its business including casualty, property, marine, energy, motor, aviation, and reinsurance.

How Lloyd’s Does It

There are several key points that make the company the market leader.

  • Reliability: Because of its one-of-a-kind business model, Lloyd’s boasts unprecedented financial security and stability. Lloyd’s financial strength is a direct result of its unique capital structure, often referred to as the “Chain of Security”—providing unmatched financial security to policyholders and capital efficiency for members.
  • Far Reaching: Lloyd’s global reach aids international business and economic development. Currently, Lloyd’s accepts business from over 200 countries and territories worldwide.
  • Relevance: Today Lloyd’s insures some of the world’s largest, most unique and complicated risks.

For more information about Lloyd’s of London or your unusual risk, contact me today at