Established in a coffee house in 1662, Lloyd's of London is a marketplace for buyers and sellers of insurance. Insurance brokers buy coverage on behalf of their clients from underwriters employed by Lloyd's syndicates. Each syndicate functions like a small insurance company, issuing policies and paying claims.
Specialist Insurance Market
Lloyd's bills itself as a "specialist insurance market" because each syndicate specializes in certain types of risks. One syndicate might focus on insuring ocean cargo while another concentrates on covering fine arts. Syndicates that write similar types of insurance often insure risks jointly. Each minimizes its potential liability for losses by assuming only a percentage of the risk.
While Lloyd's insures many run-of-the-mill business activities, it has a reputation for insuring unusual risks. Some of the most bizarre things the syndicates have insured over the years are described on Lloyd's website. Here are some examples.
Many people have a distinguishing body part that makes them unique. Some celebrities are known for their characteristic nose (Barbra Streisand) or cascading hair (Farrah Fawcett). People who aren't celebrities may rely on a certain body part for their livelihood. As the following examples demonstrate, people may go to great lengths to protect a physical feature if it's essential to their fame or fortune.
- Crossed Eyes. Ben Turpin was a cross-eyed American actor and comedian in silent films. The actor considered his eyes his trademark feature so he insured them for $25,000. The policy provided payment only in the event his eyes became uncrossed. That never happened so Lloyd's never made any payments under the policy.
- Nose. The actor Jimmy Durante insured his famous schnoz under a LLoyd's policy for $140,000. Ilja Gort, a Dutch winemaker, has also insured his nose (or rather, his sense of smell). Mr. Gort claims that his nose is so sensitive he can sniff out millions of different scents. Because his sense of smell is critical to his wine-making abilities, he has insured it under a Lloyd's policy.
- Legs. Betty Grable's million dollar legs aren't the only celebrity limbs Lloyd's syndicates have insured. They also insured the legs of Rudolph Nureyev (ballet dancer), Michael Flatley (Irish dancer), and David Beckham (soccer player).
- Smile. GlaxoSmithKline, a pharmaceutical company, hired America Ferrera, an American actress, to promote a tooth whitening product the company manufactures. The actress promoted the product with her smile. To protect its investment, GlaxoSmithKline insured the actress' smile under a policy it purchased from Lloyd's.
- Hair. Proctor and Gamble hired Troy Polamalu, a football player, to promote Head and Shoulders shampoo. The ballplayer has long, flowing hair, which P&G opted to insure with Lloyd's for $1 million.
- Beards. Beards can obviously burn but can they be stolen? Members of the Derbyshire Whiskers Club apparently thought so as they insured their beards against fire and theft.
Travel and Human Endeavors
Lloyd's syndicates have not shied away from insuring new inventions or feats of human endurance. Each of these inventions or challenges created risks that traditional insurers didn't want to insure. Fortunately, Lloyd's stepped up and provided the coverage needed.
- Auto Insurance. Underwriters at Lloyd's issued the world's first auto policy (called a motor car policy) in 1904. The underwriters who wrote the policy were much more familiar with ships than the horseless carriage. The policy described the vehicle as "a ship navigating on land."
- Aircraft Insurance. Lloyd's underwriters issued the first aircraft policy in 1911. The underwriters ceased writing the coverage one year later due to losses. Not surprisingly, planes crashed frequently back then. Underwriters finally resumed offering aircraft coverage on a regular basis in 1930.
- Swimming. In 1926, an American named Gertrude Ederle insured her attempt to swim across the English Channel. A Lloyd's policy she had purchased paid her 1863 British pounds when she made it across the channel successfully.
- Spacecraft. In 1965, Lloyd's issued the first policy covering a spacecraft. Underwriters insured the Intelsat 1, the first commercial communication satellite. The policy insured the satellite for physical damage.
- Crossing Antarctica. In 2013, Lloyd's insured a group of British explorers who attempted to cross Antarctica during the winter. After traveling 500 kilometers in total darkness, the group encountered obstacles and were forced to abandon the project.