Cuthbert Heath facts for kids

Cuthbert Eden Heath (born March 23, 1859 – died March 8, 1939) was a very important British insurance expert. He worked at Lloyd's of London, a famous insurance market, from 1880 until he passed away. People called him "the father of modern insurance" because he came up with many new ideas and took on new types of risks.

Before Heath, Lloyd's mainly insured ships and things related to the sea. But he helped change it into a global company that insures all sorts of things. He made sure Lloyd's was known worldwide for always paying claims quickly and fully, especially in the U.S.

Heath is famous for creating many new kinds of insurance, like:

• Insurance for burglary (theft).
• All-risks policies (covering almost anything that could go wrong).
• Insurance for loss of profits if a business had a fire.
• Bankers' blanket bond (for banks to protect against fraud).
• Credit-risk insurance (if someone doesn't pay back a loan).
• Insurance for employer's responsibility and workers' compensation.
• Insurance for smallpox (a disease), with a discount if you were vaccinated.
• Insurance for earthquakes and hurricanes.

He did a lot of research to understand these new risks, especially for natural disasters like earthquakes and hurricanes.

Heath also made Lloyd's reputation very strong after the huge 1906 San Francisco earthquake and fire. He famously said: "Pay all of our policyholders in full, irrespective of the terms of their policies." This meant Lloyd's paid everyone, even if their policies didn't specifically cover earthquakes. This act built huge trust in Lloyd's. He also started the idea of checking the financial health of everyone who insured through Lloyd's, which became a rule for the company.

During World War I, Heath helped a lot. He even gave his large home, Anstie Grange, to the army to use as a hospital for officers. For his efforts, he received an award called the OBE.

Early Life and School

Cuthbert Heath was born in 1859 near Southampton, England. He was one of seven children. His father, Leopold Heath, was a high-ranking officer in the Royal Navy. When Cuthbert was a child, he became partly deaf. This meant he couldn't join the military like three of his brothers did.

He was taught at home until he was eight. Then he went to Temple Grove School and later Brighton College. When he was 16, he spent a year in France and almost a year in Germany to learn French and German.

Career in Insurance

Starting at Lloyd's and New Ideas (1878–1905)

In 1878, when he was 18, Heath started working at a company called Henry Head & Co. at Lloyd's of London. Lloyd's is a special place where people called "underwriters" take on risks for money. In 1880, at 21, he became an underwriting member himself, with his father's help. He started taking on risks for himself in 1882.

Back then, Lloyd's only insured things related to ships and the sea. But in 1885, Heath started insuring against fire risks. This brought fire insurance back to Lloyd's. He then started Lloyd's first group (called a syndicate) that focused only on non-marine insurance. He became famous for growing and creating new types of non-marine insurance, which completely changed Lloyd's.

Heath's new ideas really took off in the late 1880s. For example, in 1889, someone asked if they could insure their house against burglary, which had never been done. Heath's famous answer was "Why not?" His belief was: "Any risk is insurable at the right price." Around the same time, he started insuring diamonds. He created a "jeweller's block" policy for shops (covering jewels in transit and in the store) and an "all risks" policy for customers (covering loss or theft).

In the late 1880s, Heath also invented insurance for businesses that lost money because of a fire. This was called business interruption insurance. Some people thought this was a bad idea, but Heath didn't listen to them.

In 1890, Heath started his own company, C. E. Heath & Co., to help people find insurance. This company grew very big and worked with many countries. He also wrote the first non-marine insurance policy for an American risk at Lloyd's. In 1895, he wrote the first earthquake insurance policy in the U.S. He also invented bankers' blanket bond insurance.

Heath was the first person at Lloyd's to collect detailed information about how likely losses were. He became an expert in the risks he took on. To set prices for disaster insurance, he gathered maps of 100 years of hurricane paths and earthquake records. He even shared his special notes with other insurers so they wouldn't charge too little.

In the 1890s, Heath also developed credit risk insurance. This helped businesses if their customers didn't pay them back. He also helped create employer's liability and workers' compensation insurance.

In 1894, Heath started the Excess Insurance Company to help his syndicate handle more non-marine insurance business.

During a smallpox outbreak in London (1901–1902), he offered smallpox insurance. He lowered the price by 75% if the person was vaccinated.

Before the 1900s, Lloyd's only required money to be set aside for marine insurance. In 1902, Heath convinced Lloyd's to require money for non-marine business too. He also introduced the idea of a strict yearly check (an audit) of all members' accounts, starting with his own syndicate in 1903.

The 1906 San Francisco Earthquake

On April 18, 1906, a huge earthquake hit San Francisco, followed by terrible fires. Most of the city was destroyed, thousands died, and half the people lost their homes. Few people had earthquake insurance, but many had fire insurance. After the disaster, many insurance companies tried not to pay, or paid only part of what was owed. Some even went out of business or disappeared.

Heath and his group had insured a lot of property in San Francisco, covering about 20% of all policyholders there.

Lloyd's paid out a massive $50 million, which would be more than $1 billion today. Heath's quick decision to "Pay all of our policyholders in full" made Lloyd's famous in the U.S. for being reliable. This led to a huge increase in Lloyd's business in America and around the world. The United States soon became Lloyd's biggest market.

This disaster happened when the insurance industry was already struggling from other big losses, like fires in Chicago (1903) and Baltimore (1904), and a ship fire in New York (1904).

Because of these huge losses, in 1907 Heath created excess-of-loss reinsurance. This is a type of insurance for insurance companies. It protects them from huge disaster losses like the San Francisco claims. These policies only paid out if the loss was above a certain amount, and they had a limit on payments.

Another important result of the San Francisco earthquake was that in 1908, Lloyd's made Heath's idea of a strict yearly audit for all members' accounts a rule. This meant all insurers had to prove they were financially sound, and money for claims was kept in special trust accounts. These rules became key to Lloyd's strength for many years.

Later Career (1907–1939)

Heath sold the first Lloyd's car insurance policy in 1907 for American drivers. In 1912, he sold the first insurance for a whole group of cars (a fleet) to a company in Chicago.

In 1911, he was chosen to be on Lloyd's Committee, which is its main governing group. He served there until 1915. Also in 1911, non-marine insurance, which he had started and grown so much, was officially recognized by law.

During World War I (1914–1918), Heath did many civilian services. He gave his mansion to be a military hospital and received the OBE award for it. In 1915, after German airships (Zeppelins) attacked London, he studied the risks and offered bomb insurance until the end of the war. He changed the prices based on how often the attacks happened.

In 1919, Heath started insuring airplanes and created the British Aviation Insurance Association. By this time, he was known as the main leader among Lloyd's insurers.

In the 1920s, Heath stepped back from daily business, but his syndicate continued to lead the non-marine insurance market. By the 1930s, his yearly income was about £60,000 (which was a lot of money then!), and his syndicate insured for 300 members.

Helping During the War

When World War I started in 1914, Heath and his wife lived in a large 26-room mansion called Anstie Grange in Surrey. Heath immediately started helping to recruit soldiers. He spoke at meetings and encouraged local men to volunteer. He even set up a recruitment office at Lloyd's. In 1915, he became a trustee for the Lloyd's Patriotic Fund, which helps soldiers, sailors, and their families.

He encouraged his house staff to join the war effort, and their numbers went from 26 down to three. He let the local rifle club use his shooting range and gave them ammunition. He also let soldiers practice drills on his land.

Heath was asked to help create a plan for the government to insure people against losses from bombings. The plan was used, and he served on the committee that ran it until the war ended.

In September 1916, Heath gave his mansion, Anstie Grange, to the army to use as a hospital for officers. Heath paid for the hospital and made sure it had the most modern equipment.

His wife's cousin, Dorothy Gore-Brown, was in charge of the hospital, and his daughter Genesta worked there. It became a very important hospital, taking patients directly from the front lines of the war. It had 50 staff and could hold 50 patients at a time. Nearly 700 patients were treated there from October 1916 until it closed in December 1918. It became known as one of the best hospitals in England.

In 1919, Heath joined a committee that helped soldiers and sailors get training for civilian jobs after the war.

For his work in setting up and donating the Anstie Grange Hospital, Heath was given the title of Officer of the Most Excellent Order of the British Empire (OBE) in 1920. In July 1920, he also received a thank-you letter and certificate from Winston Churchill for his help.

Awards and Recognition

• Elected a Fellow of the Zoological Society of London (1904)
• Officer of the Most Excellent Order of the British Empire (OBE), for his civilian services during the war (1920)
• Knight of Grace of the Order of St John of Jerusalem (1925)
• High Sheriff of Surrey (1925–1926)
• Deputy Lieutenant for the County of Surrey (1928)

Personal Life

In 1891, Heath married Sarah Caroline Gore Gambier. They had two children, Leopold and Genesta.

After his father passed away in 1907, Heath inherited Anstie Grange, a large country estate near Dorking, Surrey. He moved there with his family. Anstie Grange was a huge 26-bedroom mansion with a staff of 50. Heath's wife often hosted big parties, hunts, and balls for important people from London.

In 1929, he gave 200 acres of land near Leith Hill, Surrey, to the National Trust to protect it.

Heath enjoyed fishing, shooting, and hunting. He was a member of several private clubs in London. In 1910, he joined the Royal Yacht Squadron and often sailed his yacht in the Mediterranean during winter. In 1930, he bought a small estate in France. He also enjoyed country walks, reading, and water colour painting.

In 1938, Heath had a stroke, which left him partly paralyzed. He passed away at Anstie Grange in March 1939. Many important financial figures from London attended his memorial service, and people from all over the world sent their condolences. The Economist magazine called him "the first man to see the possibilities of insurance in the modern world" and praised his intelligence, character, vision, courage, and humility.