There came a real test. It made Lloyd's name a byword.
It was horrendous, and it happened in the US of A. In 1906, San Francisco fell down. A terrible earthquake crumbled the place. People lost everything. When the dust cleared, they put in their claims. Insurance businesses everywhere wrang their hands in horror, for they'd go bust if they paid up on even a fraction for the poor San Franners. All over the globe insurance companies whined that they couldn't pay up on this claim or that claim because of the small print on their contracts .. .
Everywhere, insurers slipped away.
In the pit of despond, San Francisco stared poverty in the face. Ruined. Broke. It was the end.
Then, as the dust settled, there came a sterling one-liner across the Atlantic. In old London Town a gentleman quietly swilling his morning coffee at Lloyd's messaged a few calm words. One Cuthbert Heath, a Lloyd's man of the old style if ever there was one, sent a blunt instruction across the Atlantic on the fancy new electric telegraph to hirelings in the New World. It was world-shaking and utterly memorable. From his quiet little Lloyd's box, Mr Heath commanded his reps to pay every single cent claimed by the poor unfortunates in the Great 'Quake, -whatever the small print might say. You insured with him at Lloyd's, kind sir, you were insured. Bounders might wriggle out from under, but mighty Lloyd's stood by its word. And that, said Cuthbert Heath, asking to please pass the loaf sugar, was that.
You can imagine. Relief abounded in the Americas. The consequence? Whole empires, royalty, global conglomerates, flocked to insure with Lloyd's of London. If you weren't
'A-One at Lloyd's' you ought not to be allowed into any respectable club and be off, you scoundrel you. Commerce at last had a trusty standard. Films were made extolling Lloyd's admirable virtues. Its motto was, of course, Fidentia. That's what Lloyd's sold.
Confidence. If you were a Lloyd's man, you were a Name. 'Nuff said.
The only people allowed to become Names were gentlemen of standing. History records that you had to own the equivalent of a million in modern money. Actually it was much more, because so many of the UK population in those days lived from hand to mouth.
Then times changed. Over the years, the amount of handy cash you needed was less than a third of what you insured. It was still, however, a posh mob.
One thing didn't alter, though. If you became a Name and insured somebody, you were in for every last cent. Down to the gold in your teeth 'and your cufflinks', as everybody jokingly used to say.
Nobody jokes like that now, because of Hurricane Hugo.
Remember I mentioned how the Almighty sometimes gets things cockeyed? Well, sometimes he gets things even worse.
As the 1980s bumbled along, God decided to have a field day with Planet Earth. Maybe we were looking too complacent, whatever. Bored, God roughed the world up. He foundered a vast ocean oil tanker here, caused a horrendous oil-rig fire there, and set in train disasters to blacken every front page. One especially grim event was Hurricane Hugo. Then the San Francisco earthquake returned, did a grim lap of honour. Claims beginning as a trickle became a deluge. Thousands of millions – count the noughts –
were claimed, claimed, and claimed. The world wanted its insurance money.
No honourable telegraphed message this time. Why not? Was there a good – or maybe a bad – reason?
In the good old days when insurers stood by the words they uttered, you could become a Name by getting yourself put forward by someone as honourable and worthy as yourself, even. Should you be accepted, you were in. You dined there, and folk clapped politely as you entered a restaurant with the chairman, and respectfully stood as you took your seat. Your lady received precedence. It must have been marvellous, a world of honour cocooned in an honourable world.
It was all justified, in a curious way, for the Mother of Parliaments in London had, in its wisdom, decided that what was good for Lloyd's was good for the world. Mere mortals like you and me have to send in our income taxes on the dot every year, or we go to clink. Not so Lloyd's. 'Take an extra year, old chap,' said Chancellors of the Exchequer to Lloyd's. 'Better still, take two or three years, and how is Elsie's riding coming along?'
Lloyd's even got an extra extra perk. No kidding, they were exempt a little something called Law. Lloyd's got exemption from laws in every direction, sort of immunized by Lloyd's own parliamentary act. Cushty, as we ordinary fraudsters and conmen might enviously say out here. Cushty means money for the taking. It's how some define insurance. Not me.
In those halcyon days Lloyd's must have been heaven, a legal 'licence to print money', in the defunct jokey phrase. But some people in Lloyd's market were a new breed. They were sober professionals who'd salted away solid savings. Lloyd's had seven thousand at the start of the ipyos. In less than twenty years the 'names' almost quintupled. At first, all was rosy. Until Hugo, then Hurricane Betsy, then oil fields went wrong and ships glugged ... The worst calamity of all was yet to come.
Asbestos struck. Actually, asbestos was trouble even before the 1950s. It wasn't until the 1970s, though, that incipient panic began. New Lloyd's investors, however, thrilled to become part of mighty Lloyd's, rolled in, signing gleefully on dotted lines. Prestige counted. Then horrendously huge claims washed in over the transom. Investors realized what they'd signed into. Many – that's many, many – faced ruin and some went down the pan. Royalty, ex-prime ministers, nobles, millionaire bankers, international celebrities bulging with cunny money, who had all jubilantly marched along in the profit carnival, now stared aghast into their mirrors of a morning wondering how they'd manage their penny cup of coffee today. Or ever again.
Some began lawsuits – against Lloyd's, no less, telling how they'd been lured by extravagant promise. Dark allegations were made, of official reports swept under the carpet, of Lloyd's ducking and dodging behind barricades of paperwork erected by dozens of lawyers. As the Millennium homed in, newspapers everywhere carried different slants on wild stories of supposed whispers on Walton Heath golf links, of conversations punctuated with nods and winks on the private yachts of moguls. As Americans say, it hit the fan, because unlimited liability means just that. Some fought through the courts and got massive damages against Lloyd's agents. Others wearily submitted and trudged off to live in sheds on handouts.
The media howled, thundered, yelled about cover-ups. New recruits to Lloyd's, finding to their horror that, far from sitting back and raking in the gelt, their purses and wallets were being relentlessly prised open by ever- increasing claims, began to squeal as the pain started.
The media went ballistic and demanded answers. Exactly what did happen, folk howled, to the Cromer report of 1969? Exactly why did the Mother of Parliaments, that stickler for law, on the feast day of St Apollinaris quietly slip Lloyd's that oh-so-valuable exemption from being sued? And how come the Bank of England's own special
