Lloyd’s of London and the Birthing of The American Insurance Regulatory Commission

Thoughts form patterns. Without utilizing wisdom in discerning thought patterns decision making would be mute. As the insurance industry blossomed in London the patterns for a regulated insurance industry emerged. Although the early stages of insurance emerged within a coffee house, the idea and patterns formed around it have lasted until this very day.

By 1688, after the creation of Lloyd’s Coffee House, businessmen gathered to place bets on the current news of ships coming and going from London.  The bets were placed within the confidence of Edward Lloyd’s reliable knowledge, the coffee shop owner. Directly following this burgeoning practice, came the idea of insuring the incoming and outgoing cargo and ships. Along with the insurance of ships and it’s cargo also came the practice of insuring slaves and their ships. These practices enabled Lloyd’s to be the best place for marine insurance. Which eventually gained them a monopoly of the maritime insurance business in London. This monopoly surprisingly lasted until the 19th century. As time progressed the coffee house became more popular and was used as a common resource for the public. With the increase in popularity, Lloyd’s had to become more legitimized and regulated to help the growth process.

The Lloyd’s Act of 1871 helped legitimize the company and regulated them to only deal in the realm of marine insurance. Under this new act, Lloyd’s was able to create their own bylaws and regulations to uphold the continuity of its business practices. By being legitimized by Parliament Loyd’s was also able to have personal and company property while also legally acting under the name “Lloyd’s of London”. Following this act of Parliament came the Lloyd’s Act of 1911, which gave them the ability to provide insurance outside the realm of marine insurance, into insurance of any description. Naturally, as conflicts of interest arose, came the Lloyd’s Act of 1982, which reinvented the 1911 act. The 1982 act provided Lloyd’s with a formal governing body to help regulate laws enacted by them as well as amending past credos. The idea was to have a separate non-partisan entity provide guidance for the insurance mogul, while also providing an appeals court to help settle any disputes that arise.

Although Lloyd’s hadn’t officially provided insurance overseas until 1899, they certainly helped pave the way for how America has handled the regulation and mediation of its insurance practices. Benjamin Franklin has been noted as the main conductor for the birthing of the insurance industry America now holds dear. As someone who traveled extensively overseas, he might have parlayed the information gathered from that of The Lloyd’s of London into America to help blossom of our insurance industry. His applied wisdom to the patterns emerging within the London insurance market became the foundation of what we now know of as the insurance industry in America.



Major Legislation


  • Lloyd’s Act, 1872
  • Lloyd’s Act, 1911
  • Lloyd’s Act, 1982