Tariff

Together these companies formed the Insurance ‘Tariff’ (The restraints implemented by the Tariff divided the market and some insurers refrained from joining. This gradual breakaway eventually led to the eventual dissolution of the Tariff in 1968)

Competition to the Tariff

During the early years two main groups remained outside the ‘Tariff’. These were:

The ‘Non Tariff’

Lloyds of London

The Non Tariff - They offered cheaper rates and variable discounts. The lower premiums forced the Non Tariff to be more selective to underwriting, and to accept only the better risks. To keep costs down the Non Tariff had economy administration and stricter claims procedures. Because the Tariff had set the rules and conditions they were able to accept the higher risk business.

Lloyds of London - Probably the best-known name in the Insurance world and established by a man named Edward Lloyd from a coffee shop in London. Once developed, Lloyds had an individual approach to insurance and specialised in ‘schemes’. For instance: Special schemes for Post Office workers, Clerical Staff and certain ‘types’ of vehicle were available. Lloyds were substantially different to other insurers in the way they worked and in the service they offered. Lloyds sold their product via the broking system. Brokers were those who sold the product on behalf of the underwriting Insurance Company. At the turn of the Century Lloyds had already established a substantial trade in ‘Fire’ and ‘Marine’ trade. (At this period in time Britain had the largest maritime merchant fleet in the world, therefore marine insurance was given huge priority at the turn of the 20th Century.) Lloyds had established a style of business involving ‘Syndicates’. The syndicate was made up of ‘Names’ who invested into the syndicate in the hope of receiving a dividend from the profit Lloyds would make. They also had to take the risk that Lloyds would make a loss through bad business and excessive claims which might then leave them liable to cover the costs. A classic example of this occurred in February 1989 when Britain was hit by severe winds that caused Billions of pounds worth of damage. Lloyds who had long been established found it easy to adapt to the new motor business and with the other ‘Non Tariff’ Companies they profited from this new market. One man, the ‘Underwriter’, held the responsibility of making or breaking business in the Insurance world. He was responsible for predicting what market would make them money and they are often referred to as ‘God’.

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