Underwritten Weekly

Not a functional bath. Not a quick rinse to remove the day. A proper one, involving bergamot bath salts, lavender oil, and Lush “Sleepy” body wash, applied in a sequence I am not prepared to defend in writing.

It’s been referred to by people close to me as the Princess Bath. I have chosen to accept this as a compliment.

This week I came home after a few days away to find the boiler had stopped.

The correct response to a broken boiler is to hire somebody competent. This works extremely well in London, where competent people are available at all hours and will arrive within minutes. It works less well in Deal on a Saturday night, where the only plumber in miles has quite reasonably decided that Saturday night is for something other than my hot water.

So I fixed it myself.

Armed with an adjustable spanner, my work laptop, and the last of my Claude tokens, I spent the evening as a large confused ape basically being remotely operated by artificial intelligence.

It worked. This was not because I knew what I was doing.

It was because the alternative was sitting around waiting for the problem to continue being a problem, and I have very little patience with that as a strategy.

Which is more or less the attitude that put a group of underwriters on a plane to Jakarta in 1958.

Indonesia and the Netherlands were by then in an increasingly unpleasant dispute over Dutch New Guinea. Dutch businesses were being taken over and, in December, the Indonesian authorities seized the assets of KPM, the enormous Dutch shipping company responsible for much of the country’s inter-island trade.

KPM told its captains to get out. Thirty-four ships did, but forty did not.

Fortunately for me, KPM had insured them with our market, which is handy as if they hadn’t this story really wouldn’t work at all now, would it.

The policies covered seizure, and KPM gave notice of abandonment to Lloyd’s in London. The potential claim was 114.5 million Dutch guilders, an enormous amount of money, with one particularly important condition: if the ships remained detained for four months, they would become a total loss.

So the clock started.

There was a perfectly respectable response available. The risk had been written. The insured event had happened. If the wording ultimately required the market to pay, then the market would pay.

They could have waited the clock out.

Instead, in February 1958, a delegation from Lloyd’s flew to Jakarta and started negotiating with the Indonesian government.

In my mind’s eye, this involved somebody opening a small drawer behind the Rostrum labelled “PASSPORTS”, handing them round to a selection of underwriters, and everybody heading for Heathrow. I have found no historical evidence for this, but nor have I found anything explicitly ruling it out.

What definitely did happen is extraordinary enough.

A foreign government had seized forty ships during an international political dispute, and people from our market got on an aeroplane and went to ask for them back.

Not the Navy.

Not the Foreign Office.

The insurance market.

Their argument was, essentially, that Indonesia still needed ships. Ships needed insurance. And if seizing insured vessels resulted in enormous losses for the people providing that insurance, sending ships into Indonesian waters was liable to become both more difficult and considerably more expensive.

So they negotiated.

And on 20 March 1958, before the four-month clock ran out, the Indonesian Prime Minister ordered the ships released.

They got them back.

I absolutely adore this story.

Not particularly because it saved a very large claim, although I imagine the underwriters involved were fairly cheerful about that.

I love the instinct behind it.

Insurance is very easy to describe as something passive. We price a risk, write a policy, wait to see what happens and, when it does, calculate the loss.

Except that sometimes this market looks at the approaching loss and decides that waiting is a slightly unsatisfactory response.

Forty ships have disappeared.

Right.

We’d better go and get them.

Nobody had appointed the underwriters as diplomats. There was presumably no wording saying that, in the event of seizure by a sovereign government, some people from London would put on their suits, collect their passports from the imaginary drawer behind the Rostrum and attempt to resolve an international dispute.

They simply looked at the problem and decided it had become theirs. There are worse articles of faith.

There is something wonderfully characteristic of our market in that.

Not Lloyd’s as one company, because it isn’t one. I mean this market: syndicates, brokers, underwriters, claims people and experts, all competing furiously with each other while sharing the slightly peculiar belief that other people’s improbable problems are worth taking seriously.

Sometimes the market’s job is to pay the claim.

Sometimes the job is to work out whether we can stop there being one.

There may be a little bit of doctrine creeping in here, but I think the promise is at its best when it does more than sit patiently in The Room waiting to be called upon.

In 1958, the promise got on a plane.

Forty ships were sitting on the other side of the world, a very large claim was heading towards the market, and our predecessors decided not to wait for it.

They went to Indonesia.

And they brought the ships home.

Have a good week, Rob

P.S. The boiler is fine. The Princess Bath has resumed. I fixed it entirely myself, using only a spanner and the accumulated knowledge of human civilisation.

P.P.S. Regular readers may remember when Lloyd’s went even further than Jakarta to get things back….