FIRST INSURANCE SYSTEM

Taranaki Daily News, 16 November 1926, Page 9

FIRST INSURANCE SYSTEM

DEVELOPMENT OF LLOYDS. Some interesting remarks with reference to the history and operations of Lloyds Insurance were made by Mr. George Duncan at the Rotary Club luncheon yesterday afternoon. The speaker stated that Marine Insurance was recognised as the oldest branch of insurance business. It arose through Ixmdon merchants requiring some kind ot “cover” or protection should a venture or ship meet with disaster through circumstances over which, they had no control. About 300 years ago a certain coffee house kept by Edmund Lloyd in the centre of London was much frequented by merchants who did a large export business. It was in this house and under such associations that the first recorded Marine policy was issued. It was worth mentioning that the principle of underwriting adopted then was still in use by Lloyds organisation to-day. “It is,” said Mr. Dunean, “a remarkable institution. It is the most active and its credit is second to none in the world. Its ramifications are on every coast line —wherever a ship touches. It- exercises an influence over all other insurance ventures except life insurance, which branch it does not touch. Practically all the newer branches of insurance all started at Lloyds. To-day it is possible to place an insurance on some article or subject matter Chat a well-established company would not look at.” Tho reason for this originality and success was that each policy was underwritten by, say, 8 or 9 individuals —they in turn would re-insure with another group of its members. In this way each venture or hazard was subject to intensive criticism of men keen to a degree, and behind them was a lifetime of experience in the science of averages. That was where a private or corporate body differed from Llodys. An insurance company was under the management or control or one individual who must organise and define the limits of its business so that their managers might operate on similar lines. No elasticity existed with corporate companies—offer them a novelty and the reply would be that they could not quote. With Lloyds it could be covered at a price. Even established insurance companies went to Lloyds with their excess lines.

The speaker stated that he understood that Lloyds had no published constitution and issued no balance-sheet. If a body of persons were to try to start a similar institution to work on similar lines to-day* they would signally fail. The public would have no faith in them. With Lloyds there were the traditions of 300 years behind it of always meeting their obligations in a liberal manner. \

At one time in its history Lloyds was subject to such criticism that a Royal commission was set up to inquire into its financial strength, and its ability to meet all possible contingencies. The result was that it came out of the inquiry victorious with its credit fully established. As far as the speaker could recall there was only one case where Lloyds defaulted. When the Civil War was on in Ireland a few years ago certain groups of Lloyds operated too freely against the results of civil commotion. They were warned by their brother underwriters, but too late to save disaster. Even then their brother members came to their rescue to an enormous sum, but not to the full indebtedness. It served to illustrate the point that there was a limit to the unwritten backing of the institution as a whole. Lloyds’ influence throughout the late war was immense. It was made public recently that during the blockade of Germany a hint from the Admiralty to Lloyds that the insurance on certain articles was inexpedient was sufficient to render such articles uninsurable. Lloyds passed the word on to the companies. No proclamation was necessary —a verbal message sufficed. An almost similar system applied to the insurance of vessels. A black list was issued aud no insurance took place for those vessels in the United Kingdom.