Lloyd's of London

Factual Questions
1

I’ve read about the Lloyd’s of London insurance company and I don’t completely understand the scheme. From what I get, Lloyd’s isn’t a traditional monolithic insurance company; it’s more a market. Several people pool up money and found a “syndicate” that offers insurance to clients. Lloyd’s is a marketplace where possible clients meet the representatives of the syndicates and sign contracts. It’s the individual syndicates that rake in premiums and pay if damage occurs.

Correct so far?

If yes, I have a couple of points that aren’t really clear to me:

[list]
[li] Who owns the main body, the thing that operates as “Lloyd’s of London” (and built that funky building in London)? Is it a private company, or an association of the syndicates?[/li][li] Where does Lloyd’s get its revenue from - commission on insurance contracts of the syndicates, licence fees, whatever?[/li][li] How easy is it to establish a syndicate, and who are the people behind - private persons, corporations,…(Not that I’m planning to found one, just curious)? Any new ones added, any old ones dissolved regularly?[/li][li]Is there free competition between the syndicates, in the sense that they fix their premiums on their own, trying to beat other syndicates, just like competition among normal insurance companies?[/li]
If anybody knows more here, I’d be thankful if (s)he could enlighten me.

2

you are right about Lloyds. try http://www.lloydsoflondon.co.uk/homepages/understanding_hp.htm for the spin. And try http://www.truthaboutlloyds.com/index2.html for some disgruntled investors (names), many of whom have lost millions. http://www.erisk.com/reference/case/ref_case_lloyds.asp provides a balance d view of the problems with lloyds

Lloyds syndicates can only be run by accredited brokers. This group of brokers operate like a club, often passing on insurance to each other to minimise risk. Lloyds is overseen by the Council, which I beleive is an elected council of brokers and regulatory appointees. Lloyds itself does not make money, merely the scores of brokers and syndicates. I am not sure who owns the building, but the brokers merely rent space in there.

3

Interesting links, scm1001. Thanks!