LLOYD'S OF LONDON

formally Corporation of Lloyd's international insurance marketing association in London, consisting of more than 20,000 individual underwriting members who accept insurance for their own account and risk. The corporationwhich provides generally high-risk, specialized marine, automobile, aviation, and nonmarine insurance servicessets strict financial rules and other regulations but does not itself assume liability. The members are formed into several hundred syndicates, each comprising from a few to several hundred members. These syndicates are represented at Lloyd's by underwriting agents, and it is they who accept insurance business on behalf of the syndicate members. The syndicate system was developed to handle the greatly increased insured values of the 20th century, for it permits an insurance risk to be spread over a number of individuals; when a claim is made, each underwriter is responsible only for his portion of it. Syndicate members who do not underwrite personally are known as names. Traditionally, names had unlimited personal liability for the business transacted for them by their underwriting agents. After record losses in the late 1980s and early '90s bankrupted some names and hurt many others, this policy was modified. From 1993, personal losses were limited to 80 percent of a name's total permitted annual premium income over a period of four years. Losses exceeding the limit would be paid from a pool funded by an annual levy on all names. That same year Lloyd's voted to allow corporate and institutional investors to participate in its underwriting business for the first time. Lloyd's history traces to 1688, when Edward Lloyd kept a coffeehouse in Tower Street (or, from 1692, in Lombard Street). There, merchants, bankers, and seafarers assembled to transact business informally. It also became a popular meeting place for underwritersthose who would accept insurance on ships for the payment of a premium. In 1696, for a short period, Edward Lloyd published Lloyd's News, giving news of shipping movements and other matters of interest; this was the forerunner of Lloyd's List, first published in 1734. Gradually, the underwriters at Lloyd's formed an association and, in 1774, moved their operations to the royal exchange. In 1928 Lloyd's moved to Leadenhall Street and, in 1957, to a new building in Lime Street. In 1986 Lloyd's moved to a new building adjoining Leadenhall Market; the new Lloyd's Building was a dramatic structure with a soaring interior atrium. In 1871 control over the affairs of the association by its committee was consolidated by an act of incorporation (Lloyd's Act, 1871), which gave it the power to make its own bylaws, to acquire real and personal property, and to perform all acts in its corporate name. By the act of 1871 the association was restricted to marine insurance, but by an act of 1911 it was empowered to carry on insurance of every description. Following a series of financial scandals in the late 1970s and early '80s, Parliament passed a new constitution (Lloyd's Act, 1982) to replace the original act. To avoid the conflict of interests, the newer act regulated the amount of interest that a broker may have in an underwriter. It also established a formal governing body to write and amend bylaws and to set up a disciplinary committee and an internal appeals court.