Underwriters on Roman Roads Drinking Coffee
Back in medieval times, Alain de Lille was a bit of a player who play-play-played, and folks apparently re-Tweeted his Mille viae ducunt homines per saecula Romam, ("A thousand roads lead men forever to Rome") like, a gazillion times and I think that's how Lollapalooza started, but don't quote me on that. I may need to double-check some facts.
At any rate, the general upshot of MC A-to-the-L's viral catch phrase was that any number of routes can lead one to essentially the same destination. (Speaking from my personal experiences in Rome, a grand total of zero of the roads I have taken have actually lead me to where I wanted to go on the first attempt, so after round one, the score stands at Alain: 1000, Paul: 0….and yes, that was a Roman numeral joke at the start of this very long sentence.)
It has been said of Lloyd's of London that the market embodies the modern adaptation of the proverb, "all roads lead to Rome", which substantially reduces the margin for navigational error.
Look-out Italy, here I come.
Those of you that are still awake may have noticed that said "market" and not "insurance company", which is one of the few things I have done on purpose so far in this article.
Lloyd's, you see, has an identity issue. Not only among those of us who've been around for a while but especially for kids, recent graduates and Millennials.
Contrary to popularly held beliefs; LLoyd's of London is not an insurance company, but rather a marketplace rivaling the New York Stock Exchange in terms of volume, and boasting an extraordinary history.
Lloyd's does not take risk; it is not a risk bearer. Nor is it a risk bear which is a shame as that would certainly add some spice and appeal for the kids: Paddington Buys Insurance under every tree.
Rather, Lloyd's provides an operating structure within which the exchange of risk can be transacted. It is the insurance industry's ultimate clearinghouse, resplendent with support services and centralized management.
Exciting, huh? Where's that bear when you need him?!
Meanwhile, the banking and capital market execs that are idolized in the eyes of finance undergrads, have long looked upon Lloyd's as the ginger-haired step-child of the financial sector, despite a having very limited understanding of said step-child. Other than the fact that the step-child's name might well be Lloyd. And he was probably from London.
Moreover, the hotly pursued Millennial set still perceive Lloyd's of London as an arid place where dour men in bowler hats toting umbrellas intermingle with wild-eyed white haired actuarial types with elbow patches and an overabundance of ear hair.
Nothing could be further from the truth; except the parts about clothing and personal grooming.
Indeed, the prospect of a career in Lloyd's is perhaps the only vocation more shrouded in mystery and less understood than a career in international relocation and global mobility, and for reasons unknown we have inexplicably chosen to eke out a livelihood at the social intersection of "huh?" and "excuse me?".
Perhaps surprisingly (unless you read the profile attached to this post), I write this as a reformed former treasury banking type who has seen the light; a Lloyd's evangelist if you will, spreading the good news of what I have come to learn over the past number of years.
I feel I have the credentials to set finance sector types straight, shouting from rooftops that in the case of Lloyd's of London, all roads do in fact lead to Rome, and more importantly, that Lloyd's is cool.
Millennials and students, on the other hand, not so much.
Perhaps I should have said kewl.
What follows is a essentially a public service announcement for students Millennials. It is beyond the shadow of a doubt grossly inaccurate, most likely ill-conceived and misguided, possibly entertaining and entirely well-intentioned.
Flash forward five hundred or so years from our friend Alain back in Rome and you'll stumble upon the great-great-great grandfather x 108 of the coffee revolution, one Edward Lloyd, who sometime around 1688 opened a urbane coffee hangout on Tower Street in London.
Inside Eddie's cafe, lounged trend-setting shipping merchants, then known as Shipsters.
At first, our Shipsters went to Lloyd's solely for the chill scene. Adorned with sock hats, meticulously groom beards and thick-framed glasses, they came up from the bustling warehouses lining the shores of the Thames for the free wifi, overstuffed sofas and totally delish biscotti.
However determined they may have been to appear mellow, the Shipsters, at this point hopped up on Lloyd's highly-caffeinated brew, eventually shook in their skinny jeans, stressed that online purchases from overseas might get lost or damaged while in transit.
Domestic insurers were, at the time international risk haters and lame-o for non-standard exposures.
Some things never change.
Until one fateful day, one Shipster texted another from across the same table where they were seated:
"OMG …risk is wack… r u wureed 2?"
In a flash of inspiration and innovation that would change the world of insurance, like, 4-ever, the forward-thinking Shipster across the table peered over his low fat organic chai latte and responded,
"Chillax dude. Don't go all cray cray. We can pool and trade one anothers' risk and then we'll be all, like, whatevs."
And immediately thereafter returned to waxing his ironic moustache before peddling home to his parent's basement in time for supper and fresh laundry.
From that pivotal moment forward, a highly complex and sophisticated market for the exchange of non-standard and international risk evolved to the hallowed institution that is Lloyd's of London, albeit at not more than 160 characters at a time.
But how do standard and domestic risks find their way to Lloyd's, you ask?
Jones-ing for more LLoyd's knowledge are you?
Of course you are.
Imagine for just an insane moment that you were in the insurance biz and were like amazeballs successful because of your stylin' that everyone in town bought policy from you.
Then, 'fo' shizzle, my nizzle, imagine that there was a natural disaster causing most of your customers to suffer a loss at the same time and then everybody was all up in your grill to get their claims paid.
You'd be like"My bad, but there's not enough to pay everybody."
That's where reinsurance comes in.
Had you begun to reinsure at the threshold of what your reserves could afford, you would have been seriously golden.
So there you have it:
Mille viae ducunt homines per saecula Romam.