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114-604: MS Amlin Ltd is an insurer operating in the Lloyd's , UK, Continental Europe and Bermudian markets. Specialising in providing insurance cover to commercial enterprises and reinsurance protection to other insurance companies around the world, MS Amlin's shares were listed on the London Stock Exchange until it was acquired by Mitsui Sumitomo Insurance Group in February 2016. The Company

228-441: A carrier (agents, factors, or charterers) issue a waybill and invoice for a contract of carriage to a consignee outlining contractual terms for sales , commissions , and laytime and receive a bill of parcel and lien authorizing consignment from the consignee. Law 105 stipulated that claims for losses filed by agents, factors, and charterers without receipts were without standing . Law 126 stipulated that filing

342-441: A false claim of a loss was punishable by law. Law 235 stipulated that a shipbuilder was liable within one year of construction for the replacement of an unseaworthy vessel to the ship-owner that was lost during the term of a charterparty. Laws 236 and 237 stipulated that a sea captain , ship-manager , or charterer was liable for the replacement of a lost vessel and cargo to the shipowner and consignees respectively that

456-420: A net income loss or a total loss due to an Act of God . Law 103 stipulated that an agent, factor, or charterer was by force majeure relieved of their liability for an entire loan in the event that the agent, factor, or charterer was the victim of theft during the term of their charterparty upon provision of an affidavit of the theft to their creditor. Code of Hammurabi Law 104 stipulated that

570-549: A "mini-Name"). The report also drew attention to the danger of conflicts of interest . The liability of the individual Names was unlimited, and thus all their personal wealth and assets were at risk. During the 1970s, a number of issues arose which were to have significant influence on the course of the Society. The first was the tax structure in the UK: for a time, capital gains were taxed at up to 40 per cent (nil on gilts ); earned income

684-410: A "sue and labour" clause which will cover the reasonable costs incurred by a shipowner in his avoiding a greater loss. At sea, a ship in distress will typically agree to " Lloyd's Open Form " with any potential salvor. The Lloyd's Open Form (LOF) is the standard contract, although other forms exist. The Lloyd's Open Form is headed "No cure — no pay"; the intention being that if the attempted salvage

798-480: A coffee house on Tower Street in London . It soon became a popular haunt for ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news. Lloyd's Coffee House was the first marine insurance market. It became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, and those willing to underwrite such ventures. These informal beginnings led to

912-601: A general statement of insurance; the Institute Clauses are used to set out the detail of the insurance cover. In practice, the policy document usually consists of the MAR form used as a cover, with the Clauses stapled to the inside. Typically, each clause will be stamped, with the stamp overlapping both onto the inside cover and to other clauses; this practice is used to avoid the substitution or removal of clauses. Because marine insurance

1026-434: A harbour, for example). In the 19th century, shipowners banded together in mutual underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongst themselves. These Clubs are still in existence today and have become the model for other specialized and noncommercial marine and non-marine mutuals, for example in relation to oil pollution and nuclear risks. Clubs work on

1140-772: A highly capable marine underwriter, to assume approximately 80 per cent of the market's asbestos exposure on his well-supported syndicates 317/661 in 1982. In 1985, under Lloyd's three-year accounting rule, auditors kept Outhwaite's 1982 year open, citing concerns over asbestos and pollution liability losses. These eventually ran into the hundreds of millions of dollars. After many years of litigation, Outhwaite retired to Guernsey and died on 20 November 2021. Another asbestosis-hit operation, Pulbrook syndicates 90/334, had taken out reinsurance in 1981 on its general liability business with Merrett syndicate 418; however, in 1990 Stephen Merrett (who by now controlled Pulbrook) won an arbitration ruling to void that arrangement due to non-disclosure of

1254-565: A huge hole in Lloyd's loss-payment reserves, which was initially not recognised and then not acknowledged. Second, by the end of the decade, almost all of the market agreements, such as the Joint Hull Agreement, which were effectively cartels mandating minimum terms, had been abandoned under pressure of competition. Third, new specialised policies had arisen which had the effect of concentrating risk: these included "run-off" policies, under which

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1368-497: A meeting place for people of all types of maritime occupations, who would make bets on which ships would make it back to port. Soon, the captains of ships that were suggested to fail to return were betting against the return of other ships. It was the start of Lloyd's insurance. During this time, the coffee house was also frequented by mariners involved in the slave trade . Historian Eric Williams noted that "Lloyd's, like other insurance companies, insured slaves and slave ships , and

1482-521: A new building at 1 Lime Street (where it remains today), the British government commissioned Sir Patrick Neill to report on the standard of investor protection available at Lloyd's. His report was produced in 1987 and made a large number of recommendations, but was never implemented in full. It has long been normal for one Lloyd's syndicate to reinsure another, but when Piper Alpha , a North Sea oil rig, exploded on 6 July 1988 causing an initial $ 1.4bn loss,

1596-430: A partially-mutualised marketplace within which multiple financial backers, grouped in syndicates , come together to pool and spread risk . These underwriters , or "members", are a collection of both corporations and private individuals, the latter being traditionally known as "Names". The business underwritten at Lloyd's is predominantly general insurance and reinsurance, although a small amount of term life insurance

1710-441: A result, a great many Names whose syndicates wrote long-tail liability at Lloyd's faced significant financial loss or ruin by the late 1980s to mid-1990s. It was alleged that in the early 1980s some Lloyd's officials began a recruitment programme to enroll new Names to help capitalise Lloyd's prior to the expected onslaught of APH claims. This allegation became known as "recruit to dilute": in other words, recruit more Names to dilute

1824-569: A sponsorship deal with Rugby Union 's European Rugby Cup to partner two rugby tournaments in Europe. Amlin is the title sponsor of the Amlin Challenge Cup and a premium partner of the Heineken Cup . In 2010 Essex County Cricket Club signed Amlin as its sponsor and in early 2014 Amlin signed a three-year deal to become the platinum sponsor of Essex County Cricket Club . The company also sponsors

1938-408: Is Proof of Interest). Their use continued into the 1970s before they were banned by Lloyd's, the main market, by which time they had become nothing more than crude bets. A "tonner" was simply a "policy" setting out the global gross tonnage loss for a year. If that loss was reached or exceeded, the policy paid out. A "chinaman" applied the same principle but in reverse: thus, if the limit was not reached,

2052-460: Is also credited for introducing the now widely used "excess of loss" reinsurance protection for insurers following the San Francisco quake. Heath had become an underwriting member of Lloyd's in 1880, upon reaching the minimum age of 21, on J. S. Burrows' syndicate. Within a year he was underwriting for himself on a three-man syndicate; in 1883 he also opened a brokerage business. In 1885, he wrote

2166-435: Is always written on an occurrence basis, covering claims that arise out of damage or injury that took place during the policy period, regardless when claims are made. Policy features often include extensions of coverage for items typical to a marine business such as liability for container damage and removal of debris. A deductible is the first amount of a claim that the policy holders bears themselves. There can occasionally be

2280-455: Is an excess expressed as a proportion of a claim in percentage terms and applied to the entirety of a claim. Co-insurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of tangible property or business income. The penalty is based on a percentage stated within the policy and the amount under reported. As an example: a vessel actually valued at $ 1,000,000 has an 80% co-insurance clause but

2394-419: Is asbestosis/ mesothelioma claims under employers' liability or workers' compensation policies. An employee at an industrial plant may have been exposed to asbestos in the 1960s, fallen ill 20 years later and claimed compensation from his former employer in the 1990s. The employer would report a claim to the insurance company that wrote the policy in the 1960s. However, because the insurer did not fully understand

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2508-402: Is beyond the shipowner's control, which imperils the entire adventure; 2) there must be a voluntary sacrifice, 3) there must be something saved. The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages. General average requires all parties concerned in

2622-429: Is credited for first identifying this issue and creating the first "large syndicate", initially of 12 capacity providers. By the 1880s Marten's syndicate had outgrown many of the major insurance companies outside Lloyd's. On 18 April 1906, a major earthquake and resulting fires destroyed over 80 per cent of the city of San Francisco . This event was to have a profound influence on building practices, risk modelling and

2736-469: Is determined later; although the standard wording refers to the Chairman of Lloyd's arbitrating any award, in practice the role of arbitrator is passed to specialist admiralty QCs . A ship captured in war is referred to as a prize, and the captors entitled to prize money . Again, this risk is covered by standard policies. The most important sections of this Act include::§4: a policy without insurable interest

2850-523: Is independent of the insurers who provide them with the capital to underwrite risks on their behalf. As of 2020, the Nordic region was the largest provider of marine hull insurance at 14% of the world market, China second at 12.4% and Lloyd's of London third at 8.6%, according to the International Union of Marine Insurance . The Marine Insurance Act includes, as a schedule, a standard policy (known as

2964-472: Is insured for only $ 750,000. Since its insured value is less than 80% of its actual value, when it suffers a loss, the insurance payout will be subject to the under-reporting penalty, the insured will receive 750000/1000000th (75%) of the claim made less the deductible. These are both obsolete forms of early reinsurance. Both are technically unlawful, as not having insurable interest , and so were unenforceable in law. Policies were typically marked P.P.I. (Policy

3078-456: Is known by the acronym 'MAT'. It is common for marine insurance agencies to compete with the offerings provided by local insurers. These specialist agencies often fill market gaps by providing cover for hard-to-place or obscure marine insurance risks that would otherwise be difficult or impossible to find insurance cover for. These agencies can become quite large and eventually become market makers. They operate best when their day-to-day management

3192-426: Is not always possible in losses to ships at sea or in total theft situations. In this respect, marine insurance differs from non-marine insurance, with which the insured is required to prove his loss. Traditionally, in law, marine insurance was seen as an insurance of "the adventure", with insurers having a stake and an interest in the vessel and/or the cargo rather than simply an interest in the financial consequences of

3306-487: Is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for another [...] . In legal terms, liability under the policy is several and not joint , i.e., the underwriters are all liable together, but only for their share or proportion of the risk. If one underwriter should default, the remainder are not liable to pick his share of

3420-488: Is under the control of the Council of Lloyd's. In 2023 there were 78 syndicates managed by 51 "managing agencies" that collectively wrote £52.1bn of gross premiums on risks placed by 381 registered brokers. Around half of Lloyd's premiums emanate from North America and around one quarter from Europe. Direct insurance represents roughly two-thirds of the premiums written, mostly covering property and casualty ( liability ), while

3534-514: Is unsuccessful, no award will be made. However, this principle has been weakened in recent years, and awards are now permitted in cases where, although the ship might have sunk, pollution has been avoided or mitigated. In other circumstances the "salvor" may invoke the SCOPIC terms (most recent and commonly used rendition is SCOPIC 2000) in contrast to the LOF these terms mean that the salvor will be paid even if

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3648-402: Is void.:§17: imposes a duty on the insured of uberrimae fides (as opposed to caveat emptor ), i.e., that questions must be answered honestly and the risk not misrepresented.:§18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of the risk. Failure to do so is known as non-disclosure or concealment (there are minor differences in

3762-404: Is written. The market has its roots in marine insurance and was founded by Edward Lloyd at his coffee-house on Tower Street in c. 1689. It is thus one of the oldest insurance companies in the world. Today, it has a dedicated building on Lime Street which is Grade I listed . Traditionally business is transacted at each syndicate's "box" in the underwriting room within the building, with

3876-566: The Exxon Valdez oil spill in 1989, also went into the spiral. Some of the leading LMX reinsurers at the time that suffered serious spiral losses included the numerous syndicates managed by the Gooda Walker agency, Devonshire syndicate 216, Rose Thomson Young 255, R. J. Bromley 475, and Patrick Fagan's already challenged Feltrim syndicates 540 and 542. Gooda Walker syndicate 298 became the first fatal casualty, with 13,500 policies being exposed to

3990-520: The Equitas arrangement in the late 1990s and transferred to National Indemnity Company in two stages in 2007 and 2009. Residual funds in Lioncover were later distributed to surviving PCW Names or donated to the Lloyd's Charities Trust. Lioncover was voluntarily dissolved in 2014. Lloyd's also faced action from Names on C. J. Warrilow's syndicate 553, which had chronically exceeded its underwriting capacity in

4104-473: The First Babylonian Empire in the city of Shush, Iran . Code of Hammurabi Law 100 stipulated repayment by a debtor of a loan to a creditor on a schedule with a maturity date specified in written contractual terms . Laws 101 and 102 stipulated that a shipping agent , factor , or ship charterer was only required to repay the principal of a loan to their creditor in the event of

4218-464: The Gulf of Mexico coastlines, costing the market over £50 million. The catastrophe halted the capital that hitherto had been pouring into Lloyd's, and twice as many members left between 1965 and 1968 as had left over the prior eight years. It was soon realised that the membership of the Society, which had been largely made up of market participants, was too small in relation to the market's capitalisation and

4332-566: The Marine Insurance Act codified the previous common law; it is both an extremely thorough and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance. In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for

4446-671: The general average principle of marine insurance established on the island of Rhodes in approximately 1000 to 800 BC as a member of the Doric Hexapolis , plausibly by the Phoenicians during the proposed Dorian invasion and emergence of the purported Sea Peoples during the Greek Dark Ages ( c.  1100  – c.  750 ) that led to the proliferation of the Doric Greek dialect . The law of general average constitutes

4560-453: The "SG form"), which parties were at liberty to use if they wished. Because each term in the policy had been tested through at least two centuries of judicial precedent, the policy was extremely thorough. However, it was also expressed in rather archaic terms. In 1991, the London market produced a new standard policy wording known as the MAR 91 form using the Institute Clauses. The MAR form is simply

4674-466: The 1912 "Loss Book" is on display in the Lloyd's building. The society moved into its first owned, dedicated building in 1928. It was located at 12 Leadenhall Street and had been designed by Sir Edwin Cooper . In 1965 Lloyd's wrote the first satellite insurance policy, covering Intelsat I in pre-launch. Later that year, when Lloyd's had around 6,000 members on 300 syndicates, Hurricane Betsy struck

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4788-400: The 1970s, the number of passive investors dwarfed the number of underwriters working in the market. The third issue related to a serious of losses as a result of scandal. During the decade a number of scandals had come to light, including the collapse of F. H. "Tim" Sasse's non-marine syndicate 762, which had issued large fire insurance claims that had highlighted both the lack of regulation and

4902-737: The Eventing Grand Prix at Hickstead and the UK Youth London Art Show. Amlin announced the sponsorship of the FIA Formula E Championship racing team Amlin Aguri in 2014 and Andretti Autosport in 2015. On 11 September 2001 Syndicate 2001 suffered a $ 137.2m loss from the terrorist attacks that day. In 2011 Amlin made significant losses after £500m in claims from disasters including the Fukushima earthquake and Thai floods. In January 2012

5016-502: The Lloyd's Act of 1982 which further redefined the structure of the business and was designed to give external Names, introduced in response to the Cromer report, a say in the running of the business through a new governing Council. The main purpose of the 1982 Act was to separate the ownership of the managing agents of the underwriting syndicates from the ownership of the brokering houses (which acted as intermediaries, not as underwriters), with

5130-427: The Lloyd's marine market, was expelled under suspicions but later acquitted of criminal charges. His name remained tarnished and he did not return to the market, retiring to run his Oxfordshire farm until his death in 2017 aged 87. A greater debacle arose when Peter Cameron-Webb and Peter Dixon, of PCW Underwriting Agencies, allegedly defrauded their business of some $ 60m through rigged reinsurance transactions and fled to

5244-505: The Piper Alpha disaster alone and its 1989 account producing a 650 per cent loss on capacity; Feltrim followed with a 550 per cent loss on capacity. Roy Bromley, underwriter of syndicate 475, later committed suicide after being dismissed by his Board and reportedly becoming distressed at his operation's mounting losses. Not all excess of loss writers succumbed to the LMX spiral; in fact the spiral

5358-476: The United States, never to return. The emergence of fraud at PCW was the first in a series of events that led to the resignation of Lloyd's chairman Sir Peter Green in 1983. Lloyd's was later forced to make a settlement with the roughly 3,000 Names on the various PCW syndicates involved and to reinsure their liabilities into a new syndicate, number 9001, in turn reinsured by a unique vehicle named Lioncover, which

5472-527: The basis of agreeing to accept a shipowner as a member and levying an initial "call" (premium). With the fund accumulated, reinsurance will be purchased; however, if the loss experience is unfavourable one or more "supplementary calls" may be made. Clubs also typically try to build up reserves, but this puts them at odds with their mutual status. Because liability regimes vary throughout the world, insurers are usually careful to limit or exclude American Jones Act liability. These two terms are used to differentiate

5586-501: The beginning of the year in which the business was written) before "closing" the year for accounting purposes and declaring a result. To calculate the profit or loss, reserves were set aside for future claims payments, for claims that had already been notified but not yet paid, as well as estimated amounts for claims that had been incurred but not reported (IBNR). This estimation is difficult and can be inaccurate; in particular, long-tail liability policies tend to produce claims long after

5700-457: The breach has been remedied, and the warranty complied with, prior to the loss.:§34(3): a breach of warranty may be waived (ignored) by the insurer.:§39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it ( voyage policy only).:§39(5): no warranty that a vessel shall be seaworthy during the policy period ( time policy). However, if the assured knowingly allows an unseaworthy vessel to set sail

5814-455: The claim amount payable. An average adjuster is a marine claims specialist responsible for adjusting and providing the general average statement. An Average Adjuster in North America is a 'member of the association of Average Adjusters' To ensure the fairness of the adjustment a General Average adjuster is appointed by the shipowner and paid by the insurer. An excess is the amount payable by

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5928-420: The claim. Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally known as "Hull and Machinery" (H&M). A more restricted form of cover is "Total Loss Only" (TLO), generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss. Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers transit between

6042-714: The collision by the owner of the passenger ship. In the Digesta seu Pandectae (533), the second volume of the codification of laws ordered by Justinian I (527–565) of the Eastern Roman Empire , a legal opinion written by the Roman jurist Paulus at the beginning of the Crisis of the Third Century in 235 AD was included about the Lex Rhodia ("Rhodian law") that articulates

6156-493: The commencement of the voyage in a voyage policy (section 39(1)) and a warranty of legality of the insured voyage (section 41). The term " salvage " refers to the practice of rendering aid to a vessel in distress. Apart from the consideration that the sea is traditionally "a place of safety", with sailors honour-bound to render assistance as required, it is obviously in underwriters' interests to encourage assistance to vessels in danger of being wrecked. A policy will usually include

6270-517: The company paid out a small percentage of the total claims resulting from the Costa Concordia disaster. Lloyd%27s Lloyd's of London , generally known simply as Lloyd's , is an insurance and reinsurance market located in London , England. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body governed by the Lloyd's Act 1871 and subsequent Acts of Parliament . It operates as

6384-428: The contract on the basis that it has been repudiated by the party in breach. By contrast, a warranty is not fundamental to the performance of the contract and breach of a warranty, while giving rise to a claim for damages, does not entitle the non-breaching party to terminate the contract. The meaning of these terms is reversed in insurance law. Indeed, a warranty if not strictly complied with will automatically discharge

6498-604: The death of Edward Lloyd in 1713, when the participating members of the insurance arrangement formed a committee and underwriter John Julius Angerstein acquired two rooms at the Royal Exchange in Cornhill for "The Society of Lloyd's". In July 1803, the Lloyd's Patriotic Fund was established by a group of Lloyd's underwriters. The Royal Exchange was destroyed by fire in 1838, forcing Lloyd's into temporary offices at South Sea House , Threadneedle Street . The Royal Exchange

6612-408: The degree of proof that a vessel or cargo has been lost. An actual total loss occurs when the property has been destroyed, or so damaged as to cease to be a thing of the kind insured. A constructive total loss is a situation in which the cost of repairs plus the cost of salvage equal or exceed the value. The use of these terms is contingent on there being property remaining to assess damages, which

6726-680: The early 1980s and failed to adequately reinsure the huge quantity of risks it was taking on. The solution was to create a new company in 1990 into which these liabilities could be reinsured in order to relieve the Warrilow Names. This entity was named Centrewrite Ltd and in 1993 it assumed Warrilow's 1985 and prior years' liabilities, separately also offering "estate protection plans" (EPPs) for resigned Names. Tens of thousands of Lloyd's Names bought these reinsurance policies. Centrewrite still exists today but has not written any EPPs since 2011 and conducts little other business; its most recent transaction

6840-535: The establishment of the insurance market Lloyd's of London and several related shipping and insurance businesses. The participating members of the insurance arrangement eventually formed a committee and moved to the Royal Exchange on Cornhill as the Society of Lloyd's . The establishment of insurance companies, a developing infrastructure of specialists (such as shipbrokers , admiralty lawyers, bankers, surveyors, loss adjusters, general average adjusters, et al. ), and

6954-515: The explosion on Piper Alpha. Unexpectedly large legal awards in US courts for punitive damages led to substantial claims on asbestos , pollution and health hazard (APH) policies, some dating as far back as the 1940s. Many of these policies were open-peril policies, meaning that they covered any claim not specifically excluded. Other policies (called standard, or broad) only cover stated perils, such as fire. The classic example of "long-tail" insurance risks

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7068-510: The extent of asbestos exposure, leaving the Pulbrook Names without cover for their losses of £100,000 each on average. Even earlier, in 1974, the underwriter of R. W. Sturge syndicate 210, Ralph Rokeby-Johnson, who specialised in American industrial risks, bought "stop-loss" reinsurance from Fireman's Fund and Kemper Insurance in the US on Sturge's pre-1969 exposures that were accumulating into

7182-615: The first fire reinsurance contract, reinsuring the Hand in Hand Insurance Company and marking the start of Heath's push to diversify the market into "non-marine" business. He also wrote Lloyd's first burglary insurance policy, its first "all risks" jewellery policy and invented "jewellers' block" cover. Later, during World War I he offered air-raid insurance, protecting against the risk of German strategic bombing . The subsequent Lloyd's Act 1911 ( 1 & 2 Geo. 5 . c. lxii) set out

7296-543: The fraudulent losses. The Names (few in number for such large losses) took legal action and ultimately paid only £6.25m of c. £15m of Den-Har claims under the 1976 year, leaving the Corporation of Lloyd's to pay the remainder. The Corporation also paid the near £7m loss for 1977. Lloyd's banned Sasse from the market for life in 1985; he died on 28 February 1987. Sasse had also been one of 57 underwriters on other syndicates that wrote loss-making "computer leasing" policies in

7410-466: The fundamental principle that underlies all insurance . The oldest hedging instruments to mitigate risk in medieval times were sea/marine (Mutuum) loans, commenda contract, and bill of exchanges. Separate marine insurance contracts were developed near Genoa , in Camogli in 1853 and other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of

7524-406: The gilt or other bond cum dividend and buying it back ex-dividend , thus forfeiting the interest income in exchange for a tax-free capital gain. Syndicate funds were also moved offshore (which later created problems through fraud and self-dealing). Because Lloyd's was a tax shelter as well as an insurance market, the second issue affecting it was an increase in its external membership: by the end of

7638-498: The growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice. Lord Mansfield , Lord Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The growth of the London insurance market led to the standardization of policies and judicial precedent further developed marine insurance law. In 1906

7752-460: The insurance industry. Lloyd's losses from the earthquake and fires were substantial, even though the writing of insurance business overseas was viewed with some wariness at the time. While some insurance companies were denying claims for fire damage under their earthquake policies or vice versa , one of Lloyd's leading underwriters, Cuthbert Heath , famously instructed his San Francisco agent to "pay all of our policy-holders in full, irrespective of

7866-484: The insured and is usually expressed as the first amount falling due, up to a ceiling, in the event of a loss. An excess may or may not be applied. It may be expressed in either monetary or percentage terms. An excess is typically used to discourage moral hazard and to remove small claims , which are disproportionately expensive to handle. The term "excess" signifies the "deductible" or "retention". A co-insurance, which typically governs non-proportional treaty reinsurance,

7980-520: The insurer from further liability under the contract of insurance. The assured has no defense to his breach, unless he can prove that the insurer, by his conduct, has waived his right to invoke the breach, possibility provided in section 34(3) of the Marine Insurance Act 1906 (MIA). Furthermore, in the absence of express warranties the MIA will imply them, notably a warranty to provide a seaworthy vessel at

8094-435: The insurer is not liable for losses caused by unseasworthiness.:§50: a policy may be assigned . Typically, a shipowner might assign the benefit of a policy to the ship-mortgagor.:§§60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes

8208-615: The lack of legal powers of the Committee of Lloyd's (as it was then) to manage the Society. The collapse of the Sasse syndicate came after it wrote a "binding authority" in 1975 that delegated underwriting authority to Florida-based expatriate Dennis Harrison to write property and fire risks through his Den-Har Underwriters agency, even though Den-Har was not an approved Lloyd's coverholder (a fact noticed neither by Sasse nor Lloyd's Non-Marine Association). Den-Har had suspected Mafia links and many of

8322-474: The late 1970s. These claims ultimately ran above $ 450m, wiping out more than half the entire market's profit in a single year. Problems also developed out of the Oakley Vaughan agency run by brothers Edward and Charles St George, which had written far more business than its capacity allowed in order to invest premium to take advantage of high interest rates. By writing swathes of business regardless of whether

8436-467: The liability of previous underwriting years would be transferred to the current year, and "time and distance" policies, whereby reserves would be used to buy a guarantee of future income. In 1980, Sir Henry Fisher was commissioned by the Council of Lloyd's to produce the foundation for a new Lloyd's Act. The recommendations of his report addressed the "democratic deficit" and the lack of regulatory muscle. Fisher, working with Richard Southwell QC, drafted

8550-427: The liability that they personally and their syndicates had subscribed to. Also, numerous underwriters of long-tail non-marine business, concerned at their exposures to the impending asbestosis crisis, had sought to reinsure their liabilities with other carriers. Approximately 20 syndicates, including Lloyd's deputy chairman Murray Lawrence's, paid millions of pounds in premiums to Richard H. M. Outhwaite, then considered

8664-412: The losses. When the huge extent of asbestosis losses came to light in the early 1990s, for the first time in Lloyd's history large numbers of members either were unable to pay the claims or refused, many alleging that they were the victims of fraud, misrepresentation, and/or negligence. The opaque system of accounting at Lloyd's made it difficult, if not impossible, for many Names to understand the extent of

8778-499: The major shareholders in Amlin were: The above gives the shareholder name, followed by the number of shares owned and their subsequent percentage holding. In early 2014, MS Amlin teamed up with the University of Oxford to study the dangers of relying on catastrophe predictions – in the latest sign of the industry's concern over the accuracy of computer models. In 2009, the company signed

8892-406: The maritime venture (hull/cargo/freight/bunkers) to contribute to make good the voluntary sacrifice. They share the expense in proportion to the 'value at risk" in the adventure. Particular average is the term applied to partial loss be it hull or cargo. Average – is the situation in which the insured has under-insured, i.e., insured an item for less than it is worth. Average will apply to reduce

9006-468: The members of syndicate '1' in 1985 reinsured the future claim liabilities for members of syndicate '1' in 1984. The membership might be the same, or it might have changed. In this manner, liability for past losses could be transferred year after year until it reached the current syndicate. A member joining a syndicate with a long history of such transactions could – and often did – pick up liability for losses on policies written decades previously. As long as

9120-568: The nature of the future risk back in the 1960s, it and its reinsurers would not have properly priced or reserved for it. In the case of Lloyd's, this resulted in the bankruptcy of thousands of individual investors who indemnified general liability policies written from the 1940s to the mid-1970s for companies with exposure to asbestosis claims. A group of Names mounted a legal case as the Names Against Lloyd's of London, where they attempted to prove fraud among those brokers who had involved them in

9234-467: The objective of removing conflicts of interest. Immediately after the passing of the 1982 Act, evidence came to light and internal disciplinary proceedings were commenced against a number of underwriters who had allegedly siphoned money from their syndicates to their own accounts. These individuals included a deputy chairman of Lloyd's and some of its leading underwriters. Successful marine underwriter Ian Posgate , who at one point had written 20 per cent of

9348-414: The physical destruction of a vessel or cargo.):§79: deals with subrogation , i.e., the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit. Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording. Australia has adopted an amended version of this Act, being the Marine Insurance Act 1909. Marine insurance

9462-412: The policies are written. The reserve for future claims liabilities was set aside in an unusual way. The syndicate bought a RITC policy to pay any future claims; the premium was equal to the amount of the reserve. This transaction allowed the year to be closed, and the syndicate's profit or loss declared. The reinsurer was always another Lloyd's syndicate(s), often the succeeding year of the same syndicate:

9576-497: The policy document being known as a "slip", but in recent years it has become increasingly common for business to be conducted remotely and electronically. The market's motto is Fidentia , Latin for "confidence", and it is closely associated with the Latin phrase uberrima fides , or "utmost good faith", representing the relationship between underwriters and brokers. Having survived multiple scandals and significant challenges through

9690-416: The policy paid out. Various specialist policies exist, including: A peculiarity of marine insurance, and insurance law generally, is the use of the terms condition and warranty . In English law, a condition typically describes a part of the contract that is fundamental to the performance of that contract, and, if breached, the non-breaching party is entitled not only to claim damages but to terminate

9804-445: The ports set out in the policy; the "time" basis covers a period, typically one year, and is more common. A marine policy typically covered only three-quarter of the insured's liabilities towards third parties (Institute Time Clauses Hulls 1.10.83). The typical liabilities arise in respect of collision with another ship, known as "running down" (collision with a fixed object is an "allision"), and wreck removal (a wreck may serve to block

9918-472: The practice had become so widespread that the underwriters in Lime Street initially had no idea how extensive their exposure was: the loss was passed around in what became known as the London market excess of loss (LMX) "spiral" and claim values escalated out of control. The rig's operator, Occidental Petroleum , bought a direct insurance policy from Lloyd's underwriters, who then passed part of their shares of

10032-549: The premiums were adequate, the St Georges left their Names with serious losses. Lloyd's had commissioned investigations into Oakley Vaughan, but investigators were denied access to the books and relied only on reassurances that the agency was profitable. Arising simultaneously with these developments were wider issues: first, in the US, an ever-widening interpretation by the courts of insurance coverage in relation to workers' compensation for asbestosis -related claims, which created

10146-564: The present. This contract developed so poorly that Fireman's Fund later sought its own stop-loss cover for the losses assumed from Sturge. Rokeby-Johnson later prompted Lloyd's to create a working party on asbestosis. Marine insurance In December 1901 and January 1902, at the direction of archaeologist Jacques de Morgan , Father Jean-Vincent Scheil , OP found a 2.25-metre (89 in) tall basalt or diorite stele in three pieces inscribed with 4,130 lines of cuneiform law dictated by Hammurabi ( c.  1792 –1750 BC) of

10260-576: The remaining one-third was reinsurance. The market began in Lloyd's Coffee House , owned by Edward Lloyd, on Tower Street in the City of London . The first reference to it can be traced to the London Gazette in 1688. The establishment was a popular place for sailors, merchants, and ship-owners, and Lloyd catered to them with reliable shipping news. The coffee house soon became recognised as an ideal place for obtaining marine insurance. The shop evolved into

10374-464: The reserves had been accurately estimated, and the appropriate RITC premium paid every year, then all would have been well, but in many cases this had not been possible: no-one could have predicted the surge in APH losses. Therefore, the amounts of money transferred from earlier years by successive RITC premiums to cover these losses were grossly insufficient, and the current members had to pay the shortfall. As

10488-441: The risk on to other syndicates via reinsurance. Those reinsurers then in turn reinsured part of the risk out to other reinsurance underwriters within Lloyd's (known as "retrocessionaires"), and so on. Consequently, many syndicates, especially those writing a large amount of excess of loss reinsurance, became exposed to the same claim multiple times through multiple layers in the spiral. Other catastrophes, including Hurricane Hugo and

10602-446: The risks that it was taking on. Lloyd's response was to commission a secret internal inquiry in 1968, headed by Lord Cromer , a former Governor of the Bank of England . This report advocated the widening of membership to non-market participants, including non-British subjects and then women, and the reduction of the onerous capitalisation requirements (thus creating a minor investor known as

10716-470: The risks written were rigged: typically dilapidated buildings in slums such as New York 's south Bronx , which soon burned down after being insured for large sums. Once the three-year Lloyd's accounting period passed, the 110 Names on syndicate 762 were told they faced substantial losses, from mostly fraudulent claims. Sasse's reinsurer, the Instituto de Resseguros do Brasil (IRB), refused to pay its share of

10830-443: The salvage attempt is unsuccessful. The amount the salvor receives is limited to cover the costs of the salvage attempt and 25% above it. One of the main negative factors in invoking SCOPIC (on the salvor's behalf) is if the salvage attempt is successful the amount at which the salvor can claim under article 13 of LOF is discounted. The Lloyd's Open Form, once agreed, allows salvage attempts to begin immediately. The extent of any award

10944-412: The second half of the 20th century, most notably the asbestosis losses which engulfed the market, Lloyd's today promotes its strong financial "chain of security" available to promptly pay all valid claims. As of 31 December 2022 this chain consists of £72.1 billion of syndicate-level assets, £34.1bn of members' "funds at Lloyd's" and £6.1bn in a third mutual link which includes the "Central Fund" and which

11058-509: The society's objectives, which include the promotion of its members' interests and the collection and dissemination of information. A year later in April 1912 Lloyd's suffered perhaps its most famous loss: the sinking of the Titanic . It was insured for £1 million, which represented 20 per cent of the entire market's capacity, making it the largest marine risk ever insured. The record of its sinking in

11172-513: The subject-matter's survival. The term "constructive total loss", or CTL, was used by the United States Navy during and after World War II to describe naval vessels that were damaged to such an extent that they were beyond economical repair. This was most often applied to small-type ships ( destroyer , patrol boats, landing ships, mine warfare vessels, etc.) in 1945, the last year of the war, many of which were damaged by kamikazes ; postwar

11286-433: The term was also used for ships damaged in typhoons. By this time enough ships were available for the war that some could be disposed of if severely damaged. Average in marine insurance terms is "an equitable apportionment among all the interested parties of such an expense or loss". General average stands apart for marine insurance. In order for general average to be properly declared, 1) there must be an event which

11400-430: The terms of their policies". The prompt and full payment of all claims helped to cement Lloyd's reputation for reliable claim payments and as an important trading partner for US brokers and policyholders. It was estimated that around 90 per cent of the damage to the city was caused by the resultant fires and as such, since 1906 "fire following earthquake" has generally been a specified insured peril under most policies. Heath

11514-414: The two terms) and renders the insurance voidable by the insurer.:§33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. :§34(2): where a warranty has been broken, it is no defense to the insured that

11628-406: The underwriting syndicates. It may not be immediately clear how current members of current Lloyd's syndicates, which accept business one year at a time, could be liable to pay historical claims. This came about as a result of the Lloyd's accounting practice known as reinsurance to close (RITC). A member "joined" a syndicate for one calendar year only, known as the "annual venture". At the end of

11742-430: The use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication. Out of marine insurance, grew non-marine insurance and reinsurance . Marine insurance traditionally formed the majority of business underwritten at Lloyd's . Nowadays, Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form

11856-495: The variable risk from seasons and pirates. Modern marine insurance law originated in the Lex mercatoria (law merchant). In 1601, a specialized chamber of assurance separate from the other Courts was established in England. By the end of the seventeenth century, London's growing importance as a centre for trade was increasing demand for marine insurance. In the late 1680s, Edward Lloyd opened

11970-408: The year, the syndicate as an ongoing trading entity was effectively disbanded. However, usually the syndicate re-formed for the next calendar year with the same identifying number and more or less the same membership. Since claims can take time to be reported and then paid, the profit or loss for each syndicate took time to realise. The practice at Lloyd's was to wait three years (that is, 36 months from

12084-434: Was negligently operated during the term of a charterparty. Law 238 stipulated that a captain, manager, or charterer that saved a ship from total loss was only required to pay one-half the value of the ship to the shipowner. Law 240 stipulated that the owner of a cargo ship that destroyed a passenger ship in a collision was liable for replacement of the passenger ship and cargo it held upon provision of an affidavit of

12198-652: Was announced that Mitsui Sumitomo Insurance Group had agreed to buy the firm for £3.5bn. The acquisition was completed in February 2016. MS Amlin was fined £9.7 million by the Prudential Regulation Authority for risk management failures in September 2022. As of September 2015, MS Amlin is based at 122 Leadenhall Street . MS Amlin is organised as follows: The three underwriting platforms within MS Amlin are financially rated separately: As of January 2014

12312-719: Was formed on 28 September 1998 through the merger of Angerstein Underwriting Trust and Murray Lawrence Group syndicate (the name was derived by combining 'A' from Angerstein, 'ML' from Murray Lawrence Group and 'IN' from Insurance). However, the oldest part of the business (K J Coles Syndicate) dates back to 1903. In 2008 it bought Anglo French Underwriters and subsequently renamed it as Amlin France in 2010. In July 2009 it acquired Fortis Corporate Insurance for €350m only to be renamed Amlin Corporate Insurance. On 8 September 2015, it

12426-517: Was in 2013 when it assumed the 2001 liabilities of the life syndicate 1171. It also reinsured the 1997–1999 years of Crowe syndicate 1204 and the 1999–2001 years of Cotesworth syndicate 535. In 2012 the Crowe and Cotesworth liabilities (then valued at just over £17m) were novated to Riverstone (a Fairfax company) meaning minimal liabilities remain in Centrewrite today. In 1986, the year Lloyd's moved into

12540-490: Was rebuilt by 1844, but many of Lloyd's early records were lost in the blaze. In 1871, the first Lloyd's Act was passed in Parliament which gave the business a sound legal footing. Around that time, it was unusual for a Lloyd's syndicate to have more than five or six backers; this lack of underwriting capacity meant Lloyd's was losing many of the larger risks to rival insurance companies. A marine underwriter named Frederick Marten

12654-427: Was relatively confined to a minority of such syndicates. Among the prominent reinsurers that remained profitable throughout the spiral were C. F. Palmer syndicate 314, M. H. Cockell 269/570 and D. P. Mann 435, while G. S. Christensen 958 reported only a slight loss in 1989 but healthy profits in 1990 and 1991. The early to mid-1990s saw the continuation of Lloyd's most traumatic period in its history that had begun with

12768-597: Was set up as a Lloyd's subsidiary insurance company. Lioncover assumed the liabilities of PCW as well as the associated WMD and Richard Beckett underwriting agencies in 1987. In 1988 it also assumed the 1967–1969 liabilities of syndicates 2 and 49. Dixon and Cameron-Webb remained at large in the US; Cameron-Webb reportedly died in 2004 in a nursing home in California and Dixon became a real estate agent in Florida; he died in 2017. Lioncover's PCW liabilities were reinsured as part of

12882-447: Was taxed in the top bracket at 83 per cent, and investment income in the top bracket at 98 per cent. Lloyd's income counted as earned income, even for Names who did not work at Lloyd's, and this heavily influenced the direction of underwriting: in short, it was desirable for syndicates to make a (small) underwriting loss but a (larger) investment gain. The investment gain was typically achieved by " bond washing" or "gilt stripping": selling

12996-466: Was vitally interested in legal decisions as to what constituted 'natural death' and 'perils of the sea'". Lloyd's obtained a monopoly on maritime insurance related to the slave trade and maintained it until the abolition of the slave trade in 1807. Just after Christmas 1691, the small club of marine insurance underwriters relocated to No. 16 Lombard Street ; a blue plaque on the site commemorates this. This arrangement carried on until 1773, long after

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