San Francisco fault line. Photographs of the San Francisco Earthquake and Fire from the Charles Derleth Papers. Credit:The Bancroft Library. University of California, Berkeley, Berkeley, California 94720-6000

Heath pays all claims

During this era Governments were not expected to supply relief funds, and so the burden of losses fell upon the insurance industry. In the months following the earthquake, 300 to 400 insurance adjusters, representing almost 100 companies, descended on San Francisco and processed nearly 100,000 claims requests. 
 
Until 1903 Lloyd’s wrote only marine insurance.  But in the years following, Lloyd's began to insure risks way beyond the traditional shipping ventures. Leading the way was Cuthbert Heath, the so-called father of non-marine insurance. He founded his own brokerage and insurance company when he saw that the traditional market was under siege by growing competition.  Heath was widely hailed as an innovator and is credited with the market’s first burglary, earthquake and hurricane policies.

But Heath is perhaps most famous for a cable to his San Francisco agent, after the earthquake that said: “Pay all of our policy holders in full irrespective of the terms of their policies.”  This message has since passed into insurance legend. 

The San Francisco disaster cost Lloyd’s dear: more than $50 million – a staggering sum in those days, the equivalent to more than $1 billion in today’s dollars.  

And as one of the leading earthquake underwriters, Heath faced an enormous bill.  But he honoured it and his and Lloyd's good faith was soon rewarded.

In a biography of Heath, Anthony Brown writes: “By 1907, Heath was writing for 20 Names, and business on his syndicate was booming.  One reason for this was that his attitude over the San Francisco earthquake had redounded to the credit of the London market, and helped Cuthbert himself to show a dramatic rise in profits.  The syndicate’s average profits per name in 1906 had been £431.  Now largely as a result of the improved rates on earthquake business, they had risen to £1,435.”