Given that the total cost of one
claim could accumulate to tens or sometimes even hundreds of millions of dollars, the insurance markets and in particular the marine insurance markets have a system of sharing this risk. This has originally evolved from the Lloyds Coffehouse and remains in place today as the Lloyds of London market. Each un- derwriter, who in turn represents an insurance company, will take a view of the presented risk and will decide whether or not to underwrite a pro- portion of this risk. In practice and now vastly digitalized, the insurance broker would present a description of the risk on a ‘slip’ at the various underwriters desks occupied in the underwriting room at the Lloyds of London building. The underwriter will write the percentage of risk ac- cepted until the broker has placed 100% of the risk going around the various underwriter’s desks There are of course other markets where
a ship owner or cargo shipper can insure their risks, but the Lloyds of London insurance market remains the largest market of specialized insurance in the world today. The Lloyds of London market
is built on and is still steeped with tradition, honor, professionalism, order and reputation. It is the foun- dation of many institutions, laws and statutes we now use on a day to day basis. For example, in 1764 a French built Mills Frigate left on a voyage whilst insured by Lloyds. The vessel embarked on the voyage in what was described as a ‘weak, leaky, and distressed condition’. When the ves- sel perished and a claim was filed, a lengthy court case evolved which ultimately lead to the condition that a vessel must be ‘seaworthy’ before leaving shore and that a policy can- not be paid ‘on a ship which suffered from a latent defect unknown to both parties to the contract’. In 1811 the complexity of the information
The MV Costa Lot was the disaster of the year in 2012.
used by the insurance companies had evolved significantly, but it was the creation of a network of Agents by Lloyds, which profoundly acceler- ated both the reach, and impact of that information. For the first time a global network of individuals could act as the eyes and ears of the mar- ket, finding out the truth, detecting problems and suggesting solutions. The creation of this Agency could be regarded as the start of the creation of the Classification Societies such as Lloyds Register, Germanische Lloyd, Bureaux Veritas etc.
Insurance Fraud There have been many success-
ful and attempted insurance fraud cases. One famous one is the al- leged insurance fraud scheme involving the well-known passenger liner Titanic. In the late 1990′s, at the height of the wave of “Titanic-ma- nia” that followed James Cameron’s rather soggy cinematic epic, a book
Photo: internet. 27
April 2014
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