Annual insurance premiums in the United States exceed $1.2 trillion for life, health, and property and casualty insurance alone, representing approximately seven percent of gross domestic product. Nearly five million people in the U.S. earn their living in the insurance industry. From billboards to radio and television ads, we are reminded every day just how broad and pervasive today’s insurance market is. Yet, very few of us have ever pondered how the modern insurance market has evolved from its much more humble beginnings.
In 1688, Edward Lloyd’s coffee house was one of about 80 such coffee houses in London, each serving as a center for merchants and entrepreneurs, and each offering its own specialist interest. Lloyd’s served as the center of information on shipping. To obtain insurance for a ship or its cargo in the late seventeenth century, a ship owner would engage a broker to present the risk to wealthy merchants who would agree to insure a portion of the risk. The broker’s task was to ensure that policies were underwritten by individuals with sufficient wealth to cover potential losses. Lloyd’s soon became a gathering place for those seeking or offering marine insurance.
Throughout the late 1600s and early 1700s, Lloyd’s continued to develop its reputation as the go-to source of information on shipping. In 1734, the first edition of “Lloyd’s List” – a weekly shipping news publication – was published. Author Thomas Jemson used the Lloyd’s name for its instant recognition in the shipping community. Also in the early 1700s, Lloyd’s moved its location to the center of London’s business district and emerged as the primary location for marine insurance underwriting by individuals.
The Lloyd’s market continued to grow in the nineteenth century. In 1859, a journalist commented on the underwriting room at Lloyd’s as follows: “Not a breeze can blow in any latitude, not a storm can bust, not a fog can rise, in any part of the world, without recording its history here.”
Lloyd’s is the world’s oldest continuously active insurance market place and remains as vibrant as ever. Lloyd’s operates using a syndicate system, where Lloyd’s members are formed into more than 90 different syndicates which are represented by underwriting agents at Lloyd’s. Insurance underwritten at Lloyd’s covers all lines of business from more than 200 countries and territories worldwide. Lloyd’s is known for being the first to insure new, unusual or complex risks. Lloyd’s issued the first insurance for a space satellite and the first ever aviation insurance. Lloyd’s is also known to insure certain celebrity body parts, such as America Ferrera’s smile and Troy Polamalu’s hair.
The United States is Lloyd’s’ single largest market today. Drinker Biddle & Reath proudly serves Lloyd’s as its U.S. regulatory counsel. Headquartered in Philadelphia, and founded in 1849, Drinker Biddle has 620 lawyers in 12 offices nationwide. Drinker Biddle’s London office is located at 50 Mark Lane, in London’s financial district – a stone’s throw away from the Lloyd’s building. The Drinker Biddle insurance department consists of more than eighty lawyers working for the insurance industry.
The Drinker Biddle lawyers who serve Lloyd’s and the wider London market have thirty years of experience advising non-U.S. re/insurers on accessing and operating in all U.S. local markets. The firm’s Lloyd’s practice serves as the market’s principal outside lawyer on all U.S. state and NAIC regulatory matters. The team of lawyers has worked on many significant matters for the Lloyd’s market including the market’s Reconstruction and Renewal in the 1990s. Drinker Biddle represents a number of Lloyd’s managing agents on complex U.S. regulatory and transactional matters and helps maintain their trading rights in the United States. The matters range from high-stakes, multi-state and multi-layered regulatory and advocacy/lobbying projects, such as those involving the Lloyd’s market’s multi-billion dollar U.S. based surplus lines and reinsurance trust funds, to advice on a single issue in a single state.
In March, Drinker Biddle will be hosting a mini-symposium in London for the benefit of claims and compliance professionals throughout the London market. The purpose of the symposium is to help London-based insurance professionals better understand the U.S. legal system and effectively manage U.S. claim disputes. Attorneys based in Drinker Biddle’s Philadelphia and New York offices, will team up with their London-based colleagues to present on avoiding litigation, forum selection, managing concurrent litigation and regulatory inquiries.
