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Lloyd’s Of London Definition
Lloyd’s of London is a market for insurance and reinsurance in London, United Kingdom. It’s a world leader in insurance markets and provides specialist insurance assistance to firms in more than 200 territories and countries.
A Little More on What is Lloyd’s of London
Lloyd’s is a corporate body, not an insurance company, that is regulated by Lloyd’s Act 1871 and following acts of Parliament. Edward Lloyd owned Lloyd’s Coffee House on Tower Street in London, which is where the market began around 1686. Lloyd’s of London is a market of members.
Lloyd’s is the oldest insurance marketplace that has been continuously active in the world. It has held onto unusual practices and structures that are not like other providers. The Council of Lloyd’s has six nominated members, six external and six working members. The Governor of the Bank of England is responsible for appointing the nominated members, which includes the chief executive officer.
The external and working members are chosen by Lloyd’s members. The chairman and deputy chairpersons get elected annually by the working members of the Council. Regulating bodies approve all members. At Lloyd’s, there are two divisions of firms and people active. The first class of people is the members or capital providers. Next, there are the agents, brokers, and others who support the members, represent outside customers and underwrite the risks.
There are managing agents who manage and sponsor syndicates. A major source of business for Lloyd’s is the coverholders. In 2015, there were 4,008 coverholders who generated a lucrative share of the overall premium income for the market. A network of brokers is how Lloyd’s business remains balanced and distributed globally.
Financial security is vital. Policyholders have peace of mind and the capital providers gain confidence. Lloyd has a special capital structure, known as the Chain of Security that involves central assets, funds of members at Lloyd’s and syndicate level assets. All of these provide exceptional financial security to policyholders and give members capital efficiency.
References for Lloyd’s of London
Academic Research on Lloyd’s of London
Reinsurance trading in Lloyd’s of London: Balancing conflicting-yet-complementary logics in practice, Smets, M., Jarzabkowski, P., Burke, G. T., & Spee, P. (2015). Academy of Management Journal, 58(3), 932-970. After studying the individual cultures of reinsurance trading in Lloyd’s marketplace, this paper contributes to the present discussions regarding institutional complexity by moving the focus away from static responses to the complexity. The authors identify three mechanisms of balance, which are demarcating, bridging, and segmenting. These allow people to control competing logics. The paper also uses a theoretical model to integrate the mechanisms, which offers an explanation as to how individuals can constantly keep coexisting logics. The writers’ focus on a still existing context of institutional complexity shows how it can be customarily enacted within practice every day.
The costs and benefits of increased accounting regulation: a case study of Lloyd’s of London. Gwilliam, D., Macve, R., & Meeks, G. (2005). Accounting and Business Research, 35(2), 129-146. There are beneficial documents with theoretical study in the cost-benefit analysis of accounting management but there is not really any literature with an analysis of the costs and benefits regarding changes in accounting regulation. This paper tries to provide this analysis for modification in audit and accounting regulation at Lloyd’s of London between 1982 and 1985. The goals of this paper are to improve the cost-benefit analysis methodology and tell of debate regarding how Lloyd’s market is evolving.
Regulatory Crisis at Lloyd’s of London: Reform from within, Kelley, I. (1994). Fordham Int’l LJ, 18, 1924. Lloyd’s of London is the most famous market for insurance in the world. For 300 years it has been held as the safest place for risk insurance. Lloyd’s has grown immensely from its humble starts in a coffee shop and is a worldwide marketplace for refined reinsurance and insurance activity.
Lloyd’s of London and the Problem with Federal Diversity Jurisdiction, Tollin, H. M., & Deckman, M. (1999). J. Transnat’l L. & Pol’y, 9, 289. The authors discuss federal jurisdiction and the names of Lloyd’s. They also talk about different ways to establish diversity jurisdiction by dismissing non-diverse names and applying the trust analysis.
Insurance Exchange for the Americas: Florida’s Answer to Lloyd’s of London and the New York Insurance Exchange, An, Herzog, J. (1980). Fla. BJ, 54, 684. Lloyd’s has been a success by being a place for underwriting insurance. By 1978, the market had 14,000 investors. Due to the success of Lloyd’s, Americans are wondering why they can’t have something similar. Florida is trying to develop a similar operation. Florida passes enabling legislation for Florida Insurance Exchange in 1979. In 1980, bylaws and constitution were approved for the prospective Insurance Exchange of the Americas, Inc. The Florida Act of 1979 is almost identical to the New York Insurance Exchange Act, including the constitution and bylaws.
Financial control in the financial services industry: The case of Lloyd’s of London, Gwilliam, D., Hoskin, K., & Macve, R. (1992). In Perspectives on Financial Control (pp. 203-231). Springer, Boston, MA. In the last ten years, UK financial institutions have seen regulation changes to boost competition and improve liability to capital providers and clients. The framework was enforced by the Financial Services Act 1986 and also by related laws for individual financial sectors. Adequate financial reporting and financial controls are significant.
Lloyd’s of London and Problems Arising By Reason of its Business in this Country, Kuvin, H. A. (1954). Ins. LJ, 406. This article discusses the transaction by Lloyd’s underwriters with the United States. However, the author will demonstrate with full clarity that the underwriters of Lloyd’s of London do not write reinsurance or insurance in the United States.
Lloyd’s of London and Diversity Jurisdiction: Analyzing the Citizenship of a Unique Organization, Beauchesne, M. C. (1999). Roger Williams UL Rev., 5, 217. This paper begins by explaining the 28 U.S.C. section 1332 which provides the guidelines for the district court to correctly obtain original jurisdiction contingent on the diversity of citizenship.
Lloyd’s of London dramatically lowers its flood insurance rates in Florida, Harrington, J., & Martin, S. T. (2014). Tampa Bay Times. Lloyd’s of London and other insurers have moved into the market because of the rate increases under the National Flood Insurance Program. Because Lloyd’s expanded into other states, the risk was lesser than from any single storm, which made it possible to significantly lower flood rates.