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Lloyds of London is a name familiar to many in the insurance industry

Lloyds of London is a name familiar to many in the insurance industry

However, perhaps the most interesting fact about Lloyds of London is that it is not an insurer nor does it issue policies. Rather, Lloyds of London is an association of members who write insurance for their own accounts. The New York Stock Exchange bears the same relationship to stock purchases as Lloyds bears to the purchase of insurance.

Like the New York Stock Exchange, Lloyds provides quarters for its members as well as procedures for business transactions. Though neither organization engages in trade, each provide facilities and rules that govern how its members will pursue trade. In addition, Lloyds maintains worldwide underwriting information and a complete record of losses. It also aids in loss settlements and supervises salvage and repairs throughout the world.

At Lloyds, an insurance transaction begins when a proposal is placed before the underwriting members, or their agents, by a licensed broker. The broker prepares the policy and submits it to the Policy Signing Office where the policy is examined. If the policy conforms to agreed-upon rules, it is submitted to the underwriters. Those underwriters who wish to participate in the policy affix their signatures or underwrite the risk. American Lloyds associations operate under the same principles and methods as Lloyds of London.

Insurers Financial Status

Changing economic conditions and highly publicized failures of financial institutions (from savings and loan companies to insurance companies) have focused much attention on the financial status of private insurers.