Historical Lloyd’s Insurance Marine Claims
Lloyd’s of London has been synonymous to the history of Marine Insurance, here are just a few of the historical marine claims which have occurred over the years:
1799 The loss of the Lutine
The economy in Hamburg was on the brink of collapse, and the HMS Lutine was ordered to deliver a vast sum of gold and silver, collected by City of London merchants, the German port. It was Lloyd’s underwriters who insured the Lutine’s highly valuable cargo.
On the 9th October, the Lutine encountered a ‘heavy gale’ and ran aground on the treacherous Dutch coast, by the island of Vlieland, or as it was known the, Fly. The crew was lost, Captain Lancelot Skynner went down with his ship, and it was left for the Commander of the Squadron, Nathaniel Portlock, to inform the Admiralty of his ‘extreme pain’ at the loss of this vessel, and the treasure in its hold.
Note: The Lutine Bell, weighing 106 pounds and measuring 18 inches in diameter, is synonymous with the name of Lloyd’s. Traditionally it has been rung to herald important announcements – one for bad news and two for good.
The bell was carried on board the French frigate La Lutine (the sprite) which surrendered to the British at Toulon in 1793. Six years later as HMS Lutine and carrying cargo of gold and silver, she sank off the Dutch coast. The cargo, valued at around £1 million, was insured by Lloyd’s underwriters who paid the claim in full.
There were numerous salvage attempts and in 1859 the wreck yielded its most important treasure – the ships bell. It was hung in Lloyd’s Underwriting Room at the Royal Exchange as was rung when news of overdue ships arrived.
Whenever a vessel became overdue, underwriters would ask a specialist broker reinsure some of their liability based on the possibility of the ship becoming a total loss. When reliable information became available, the ringing of the bell ensured that everyone with an interest in the risk became aware of the news simultaneously. The bell is no longer rung as the result of a vessel becoming overdue. Today, the ringing of the Lutine bell is generally limited to ceremonial occasions, although in rare instances exceptions are made.
1909 – White Star Line’s RMS (royal Mail Ship) Republic
Republic collided with the Florida in thick fog off Nantucket, Massachusetts, in shark-infested water. The Republic was equipped with a new Marconi telegraph system, and became the first ship in history to issue a telegraphed distress signal. It was successfully picked up so, although the ship (which was loaded with gold and jewellery) sank, no lives were lost.
1912 – Titanic
On the 14th April 1912, the spectacular Titanic – at the first time, the most luxurious ocean liner ever built – collided with an iceberg during her maiden voyage.
She went down in freezing waters of the North Atlantic, 375 miles from Newfoundland, in just two hours and 40 minutes.
She carried 2,224 passengers and crew, but had lifeboats for only 1,178 people (slightly more than half). Sadly 1,514 people died.
This was a human disaster on a colossal scale, but it’s also a story with strong links to the history of Lloyd’s, where the ship was insured for over £1m.
At the time of the disaster, the market-and the media-was still in the early stages of using wireless telegraphy to communicate with ships at sea. Lloyd’s was a significant contributor to the new technology and, with the help of inventor Guglielmo Marconi, had set up signal stations from Cornwall to Canada so that vessels crossing the Atlantic could communicate with land.
Interestingly the Lloyd’s signal station in Halifax, Nova Scotia, was called Cape Race, and was the first to hear the ship was sinking. Other signal stations issued conflicting reports, resulting in great confusion. Two days later, some newspapers still thought the Titanic had survived, and was being towed to Halifax.
Lloyd’s, however, understood the situation. Underwriters began to trade ‘overdue insurance’ – a form of reinsurance commonly purchased after a marine incident.
The Chicago Record Herald of 16th April conveyed the market’s heightened emotion under the headline ‘Lloyd’s near to panic’.
‘Exciting scenes were witnessed at Lloyd’s underwriting rooms yesterday. Insurance losses in the last six months have been unparalleled at Lloyd’s in liners of the biggest class. Both the Delhi and the Oceana have been wrecked, and now comes the disaster of the Titanic…….’
Back on the 9th January, broker Willis Faber & Co had come to Lloyd’s underwriting room to insure the Titanic and her sister ship, the Olympic, on behalf of the White Star Line.
It was considered a prestigious risk, with cover for the hull alone standing at £1m – around £95m in today’s money. Numerous Lloyd’s syndicates put their names on the slip, covering amounts ranging from £10,000 to £75,000. Willis was able to negotiate a favourable premium for this proudly ‘unsinkable’ vessel of just £7,500.
Despite the high levels of claims arising from the tragedy, insurers paid out in full within 30 days.
From Lloyd’s perspective, the Titanic will long be remembered as one of the market’s biggest losses alongside major natural and manmade catastrophes such as the loss of HMS Lutine in 1799, the 1906 San Francisco Earthquake and more recently 9/11, Hurricane Katrina and the Japanese earthquake and tsunami of 2011.
1914 – The Empress of Ireland
The Empress was rammed in fog in the St Lawrence River, and sank in 15 minutes, with the loss of over 1,000 lives.
1922- The Egypt
The elegant Edwardian P&O liner the Egypt was bound for Bombay on her very last voyage when, in the Bay of Biscay, she found herself in such dense fog, she almost came to a standstill. Knowing the ship was now close to a main trading route, the captain ordered the liner to travel slowly and carefully.
At 7pm, she was rammed by a French cargo steamer the Seine, whose bows were strengthened to deal with Baltic ice. The Egypt keeled over from the impact, and sank within 20 minutes.
The Egypt would probably be long forgotten had she not been carrying about ten tonnes of silver and five tonnes of gold bars – in all, a fortune worth over £1million.
Most of the precious cargo was insured with Lloyd’s and at a depth of 400ft was deemed unsalvageable. However an Italian crew, led by the irrepressible salvage expert Giovanni Quaglia and using state of the art diving suit, managed to locate the wreck, detonate explosives to find a path to the strong room and – the weather broke. During t winter, most of the crew, but not the commander Quaglia were killed on another operation. But then, in 1932, the Lutine Bell rang to announce that two gold bars had been found. Within the next four years, 98 per net of t fortune had been recovered.
1956 – The Andrea Doria
The Andrea Doria, a stunningly beautiful liner and an icon, of Italian pride, was stuck in fog by the Swedish-American Stockholm, just off Nantucket Light. The ship stayed afloat for over 11 hours, so nearby vessels could rescue the majority of the passengers, though 46 people died. But this remains one of the worst maritime disasters to occur in US waters, and it cost underwriters $13m, and Lloyd’s nearly $6m.
1958 – Indonesia seized 40 Dutch Ships
Indonesia seized 40 Dutch Ships. A Lloyd’s delegation flew to Jakarta and managed to negotiate the ships safe return.
1989 – Exxon Valdez
The oil tanker Exxon Valdez ran aground in the Gulf of Alaska, spilling hundreds of thousands of barrels of crude oil onto the coastline, this was the second largest oil spill in US history.