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29th May 2007

It’s Not Unusual

Lloyd’s once insured the transportation of ten elephants in an aeroplane.

Insuring the more obscure risks is all in a day’s work for some underwriters and brokers In the Lloyd’s Market.

How many elephants can you fit into an aeroplane? It’s not a joke: it’s just one of the many challenges facing underwriters and brokers in today’s Lloyd’s market, where insuring the weird and wonderful is all in a day’s work. The answer to the above poser is, by the way, ten.

It’s fair to say that the Lloyd’s market made its name by specialising in insuring unusual risks. Father Christmas’s beard, space shuttles, acts of piracy – you name it, Lloyd’s underwriters are likely to have insured it. So it came as no surprise to Lloyd’s syndicate 1209, managed by XL London Market, when a client asked it in 2004 to insure the 36-hour transatlantic flight of ten elephants – seven of which were covered on one slip for $1.7 million.

“It was a mammoth task,” explains Robert Wells, livestock underwriter at XL Insurance. “The original request came from a long-standing client through a US agent, but the initial contact came because the client knew Lloyd’s underwriters dealt with this type of risk.”

Jumbo jetting
“I did quite a lot of research, because getting ten elephants on a plane, no matter which way you look at it, is quite a feat. They were covered against ‘all risks of mortality’, which is all-encompassing.”

Thanks to sound risk management and thorough planning, the flight went without a hitch.

“I have never had to deal with anything like this,” says Wells. “We used surveyors to help us get through the initial underwriting stage and we also had to have someone travelling with the elephants.”

Animals feature strongly in Lloyd’s history. “We insured a two-headed albino rattlesnake that we could only insure against restricted perils because, believe it or not, the last one insured at Lloyd’s died. An apparent disagreement between the respective heads had fatal consequences when one head bit the other,” says Wells.

Animal magic
Lloyd’s has long been a forerunner in developing innovative animal products. Lloyd’s was the insurer of the 1981 Derby winner Shergar, the great Irish racehorse that vanished after being kidnapped in 1983, and 1970s legendary US horse Secretariat was covered by Lloyd’s for $10 million against failing a fertility test.

Celebrity insurance is another area which has evolved much over the decades – a necessity for stars to insure their talent, or their best physical features. The Beatles took out an accidental injury policy signed by all four members, while the crossed eyes of Ben Turpin (a huge silent film star in the US), Fred Astaire’s and Tina Turner’s legs, Rolling Stones’ guitarist Keith Richards’ hands and Egon Ronay’s taste buds have all passed through the Lloyd’s system. Creechurch offers very specialist types of cover for the world of celebrity. Jonathan Thomas, active underwriter, was even approached to insure a celebrity’s chest hair. “It was definitely one of the most obscure requests I have ever had to deal with, but I managed to come up with a wording that addressed the necessary issues involved.”

In the early part of the 20th century, Lloyd’s underwriters insured cinema-goers against death from excessive laughter while at the cinema. At the time, a few people had been so affected by the hilarious nature of comedic films that they needed medical assistance.

Away from entertainment, the art world seems to be constantly in the news at the moment, be it theft or the wilful or accidental destruction of paintings, sculptures and ornaments. In 2002, a sculpture by Marc Quinn melted after the freezer it was stored in was disconnected by builders. The work was a life-size cast of the artist’s head, made out of nine pints of his own blood.

It had to be kept frozen but the freezer was accidentally unplugged. A claim was submitted to Lloyd’s underwriters for approximately £1 million.

By royal appointment
Despite having a huge profile worldwide, Lloyd’s is still regarded by a minority as a classically British institution. Maybe that is because it has such a special relationship with the British royal family. In November 1986, HM The Queen officially opened the new building at One Lime Street and the royal family are regular visitors.

The first underwriter to insure against the risk of twins was Richard Thornton (1776-1865) who insured against the risk of Queen Victoria having twins as her first born. On a small scale, a grain of rice with a portrait of the Queen and the Duke of Edinburgh engraved on it was insured for a sum of $20,000.

In 1897, the year of Queen Victoria’s Diamond Jubilee, several Indian princes came to England to take part in the celebrations.

A maharajah took out insurance for his valuable jewellery and also for his god, which he brought with him, for a sum of £200,000.

After two high-profile incidents at the beginning of 2007, space cover is back on the insurance agenda and matters ‘not of this earth’ are common enough. A man who was afraid of ghosts insured himself against seeing one, fearing that it might frighten him to death, while a group of American Funeral Directors wanted insurance for medical expenses in the event of corpses on its premises coming back to life.

But time moves on; modern advances in everything from e-commerce to identity theft are being addressed and the policies are out there for even the most modern risks. Lloyd’s – traditional yet modern. Strong yet flexible. And these incredible risks are just the tip of the iceberg.

Then there’s the list of amazing things that didn’t get insured. On 1 October 1935, the Daily Mirror reported: “An attempt to insure the ‘life’ of Mickey Mouse for a million pounds has been refused by Lloyd’s on the grounds that Mickey is ‘immortal’, according to the United Artists Corporation of New York.” Now there’s a feature.
For more visit www.lloyds.com