Underwritten Weekly

These emails are supposed to be nonsense, but I accidentally included an objective fact right there in the subject line. Schoolboy error.

Friday nights are my favourite. It means pizza and wine at my local, The King’s Head. It means retreat, decompression and relaxation among a brilliant group of friends, where we swap tales of the week that’s just been, and after a pint or two of idea juice, it might even be where I draft the final version of the Nonsense on a Sunday.

Last Friday, in walked a stranger.

We’re a friendly pub – the King’s Head doesn’t do unfriendly – so we got chatting. He spilled my drink, which was not an auspicious start. But we recovered and, somewhere over the course of the evening, he revealed himself to be a former Lloyd’s underwriter.

My friends groaned, collectively and audibly, and concluded – correctly – that I was lost for the evening.

A spilled drink led to a good evening. A good evening led to a conversation about Lloyd’s. And it occurred to me, walking home, that the greatest catastrophe in London’s history led to exactly the same place.

Bear with me.

In the early hours of 2nd September 1666, a fire broke out in a bakery on Pudding Lane in the City of London.

The Lord Mayor was woken and told about it. He looked out of his window, concluded it was nothing to worry about, and went back to bed.

He was wrong.

The fire burned for four days. 13,200 houses. 87 churches. St Paul’s Cathedral – gone. 70,000 people, out of a city of 80,000, left with nothing. The medieval city of London, built over centuries since the Romans, erased over a long weekend.

There was no insurance. None. Not a policy, not a premium, not a slip. If your house burned, it was gone. You were destitute. The city had no mechanism for recovery beyond charity and the goodwill of neighbours – and when 70,000 people lose everything simultaneously, the goodwill of neighbours has its limits.

Still, at least there was no Sunday Nonsense.

Into this smoking ruin walked a man called Nicholas Barbon.

Barbon was a property developer, which in 1666 made him either very unlucky or very well positioned, depending on how you looked at it, but he looked at 13,200 empty plots and saw opportunity. He started rebuilding. And as he rebuilt, he asked himself a question that nobody had thought to ask before.

What if this never had to happen again?

Not the fire. Fires happen. But the destitution. The total loss. The nothing.

In 1681, fifteen years after the fire, Nicholas Barbon founded “The Fire Office” – the first insurance company in history. His insight was almost insultingly simple: if enough people pay a small amount regularly, the few who suffer catastrophic loss can be made whole. Spread the risk. Pool the misfortune. Price the danger before it arrives.

Sound familiar? That’s because it’s survived intact for 345 years, and counting.

Christopher Wren rebuilt the churches. He gets the credit. There are statues. There are books. There is a dome.

Nicholas Barbon built the financial architecture that meant the next fire, and the one after that, and the ones after that, didn’t have to mean destitution. He invented the mechanism and the market that the entire world now relies on.

He gets almost nothing. No statue. No dome. A footnote in history, his highest accolade is a callout in an increasingly silly email on a Sunday.

He deserves more.

Every slip that has ever been signed – every yes where there might have been a no, every risk priced before the disaster arrived – traces back to a man standing in the ruins of London in 1666, asking what if.

The Great Fire didn’t destroy the City. It created our market.

A localised catastrophe became a global gift.

We are, all of us, the inheritors of Nicholas Barbon’s question. Every tool we build, every workflow we improve, every slip that gets written faster and more accurately because of the work we do – that’s his question being answered, 360 years later.

Have a good week.

Rob

P.S. The former Lloyd’s underwriter at The King’s Head didn’t know any of this either. But he bought me a few replacement drinks and patiently listened to my well-worn insurance stories, so I’ve decided he’s one of us.