People who insure large financial transactions are called underwriters, but what were its origins?
In 1687 a coffee shop opened on Tower Street in London. The coffee shop was large and attracted a huge clientele. Since the coffee shop was right next to the London Docks, one of the topics that was often the source of gossip at the coffee shop was ships.
What was sailing from where? What cargo was it carrying?
There would be regular wagers on which ship would reach safely and which one would not. Those by the docks would know the captains who were taking the ships and would wager based on their personalities. Often, there even used to be betting about the possible outcome of a voyage or an Admiral sent out to war.
The betting kept the customers coming back in and for the owner of the coffee shop, keeping the betting going became important. For many who were taking the bets, information about the ships was important to fuel their betting.
The owner of the coffee shops set up a network of informants and would regularly publish a newsletter with information about foreign ports, tides and the arrival and departure of ships.
The name of the owner of the coffee shop was Edward Lloyd and the newsletter he published came to be called the Lloyd’s List.
Soon ships began to be auctions at the coffee shop and captains would come in to share their stories. If someone wishes to rise above just a wager they could even insure a ship!
A contract would be drawn up and the insurer would sign his name underneath. The insurer therefore came to be called the Underwriter.