A truly global market
A Lloyd's of London case study

Page 1: Introduction - What is insurance?

Life is full of risks. Insurance can provide security against some of these risks. For example, motor insurance provides cover for certain costs resulting from a road accident or the theft of a car. A contract of insurance involves the insured making a payment, (a premium) to an insurer. In return for the premium the insurer agrees to provide the insured with cover for certain types of losses...
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Page 2: Insurance and the UK economy

All businesses are exposed to risks in their day to day operations. Without insurance cover to provide protection against some of these risks, businesses would find it difficult to operate efficiently and profitably. Therefore, insurance is a vital part of most developed economies. Insurance and pension funds account for 1.4%* of the UK's total Gross Domestic Product (GDP). Insurance also accounts...
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Page 3: Lloyd´s of London

Lloyd's of London is the world's oldest and best known insurance market. In the 17th Century, London's growing importance as a trade centre led to an increasing demand for ship and cargo insurance. Business in those days was conducted very informally. A merchant with a ship to insure would ask a 'broker' to take the risk from one wealthy merchant to another seeking insurance cover. Each...
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Page 4: Lloyd´s: a market, not a company

A market place is a physical or virtual place that enables those with goods or services to sell, to make contact with those who want to buy. Many UK towns have local market places where traders sell their products from stalls to consumers. There are larger markets where bulk trade in meat, fish, flowers and other commodities takes place for resale by local businesses nationwide. New Covent...
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Page 5: Roles in the Lloyd's market

The Corporation of Lloyd's The Corporation of Lloyd's is the administrative body of the Lloyd's market. The Corporation itself does not provide insurance. The role of the Corporation is to provide the infrastructure for underwriters and brokers to do business. The Corporation acts in a supervisory capacity to ensure that the market operates efficiently and effectively and that those involved meet...
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Page 6: Types of market

There are a number of different types of markets in which businesses operate: Commodity markets include those for raw materials such as cocoa used in the production of chocolate. A shipment of cocoa from Africa may be split between two buyers - the product is the same for both buyers. Insurance bought at Lloyd's is often bespoke - the product or policy is created specifically for the client, so...
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Page 7: Transactions

To understand the difference between transactions in a consumer market such as private car insurance and in a business market such as marine insurance, it is necessary to identify the organisations involved in the chain. Very often a consumer will purchase motor or household insurance directly from an insurer. Therefore, a typical consumer private motor policy transaction might be represented...
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Page 8: Conclusion

All business involves risk, and so business owners need to protect themselves through insurance which will pay out if the events covered by the policy occur. This helps the business to continue to trade. Lloyd's allows businesses to buy cover against risks in a way that suits their needs. Lloyd's underwriters specialise and compete against other underwriters so the client's needs are best...
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Related: Lloyd's of London
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