Cuthbert Heath Eden

Cuthbert Eden Heath OBE, DL (23 March 1859 – 8 March 1939) was a British insurance businessman, underwriter, broker, and syndicate owner at Lloyd's of London from 1880 until 1939. He was involved in the development of non-marine insurance at Lloyd's and has been described in insurance histories as "the father of modern", "the maker of modern Lloyd's", and "the father of non-marine insurance at Lloyd's". His work contributed to Lloyd's expansion beyond marine insurance into general and specialty-risk insurance.

Heath is known for originating the following forms of insurance: burglary, jeweller's block, all-risks policies, loss-of-profits after fire, bankers' blanket bond, credit-risk, employer's liability, workmen's compensation, smallpox-if-vaccinated, excess-of-loss, air-raid, earthquake, and hurricane. He did pioneering and detailed research and risk-assessment for insurance he originated, in particular for earthquake and hurricane probability.

He also cemented Lloyd's reputation in the U.S. and worldwide by his immediate response to the devastating 1906 San Francisco earthquake and fire: "Pay all of our policyholders in full, irrespective of the terms of their policies." In addition, he originated the solvency audit for members of Lloyd's syndicates, which became mandatory at the company.

Heath engaged in numerous civilian services during World War I, including giving his mansion Anstie Grange to the War Office for use as an officer's hospital, for which he was appointed an OBE.

Early life and education Cuthbert Heath was born in 1859 in Forest Lodge near Southampton, England. He was the fourth of seven children of Captain Leopold Heath, In childhood Cuthbert contracted partial deafness, which prevented him from joining the military as three of his four brothers did.

Heath was tutored privately until the age of eight, He attended Brighton College through 1874, with the backing of a £7,000 deposit provided by his father,

Lloyd's at the time was a marine insurance-only insurer, so Heath was a marine underwriter at first. In 1885 he reinsured Hand in Hand Fire & Life Insurance Society's fire risks, thereby reviving fire insurance at Lloyd's, which had previously been discontinued due to high taxation rates. Around the same time he also began insuring the diamond market, resulting in his creating a "jeweller's block" policy for merchants that covered jewels in transit and on the premises, also known as business interruption insurance. This controversial move created a major uproar, and he was summoned by the Chairman of Lloyd's Fire Offices Committee and asked why he was "ruining fire insurance". In 1890 Heath also wrote the first American risk ever in Lloyd's non-marine market. In 1895 he wrote the first earthquake insurance policy in the U.S. In order to price catastrophe insurance, he initially collected maps of 100 years of hurricane paths in the West Indies, and made detailed notes in a little black rating book which acquired renown. With an initial capitalisation of £5,000, it was used as a reinsurance backing for his syndicate.

1906 San Francisco earthquake and aftermath On 18 April 1906 a major earthquake hit San Francisco, and the resulting fires destroyed over 80% of the city, killed thousands of people, and left half of the population homeless. Misled by local propaganda as to earthquake likelihood, few residents of San Francisco had bought earthquake insurance, but they had bought fire insurance. In the wake of the devastating fires following the earthquake, many insurance companies fought paying their policyholders, often by quibbling over causality (since the insurance was not for earthquakes), or paying only 75% of the amounts due. At least 14 insurers went bankrupt, and some insurers – mostly German and Austrian – simply disappeared and denied all coverage. Nevertheless he immediately cabled his San Francisco agent a now-legendary instruction:

Lloyd's paid out a staggering $50 million, the equivalent of more than $1 billion in 2010 currency. The United States soon became Lloyd's largest market. Additionally, a few months after the San Francisco earthquake and fires there were further catastrophic earthquakes and fires in Valparaiso, Chile and in Kingston, Jamaica.

By 1907 Heath therefore devised excess-of-loss reinsurance, to provide insurers with the protection they needed against catastrophe losses like the San Francisco claims. These reinsurance policies paid out only when the loss was above a certain threshold, and put a cap on payments;

During the First World War (1914–1918), Heath engaged in a considerable number of civilian service activities, including donating his mansion for use as a military hospital, for which he was awarded an OBE. Also by 1919, he was noted as "the leader among the Lloyd's underwriters", with his finger on the pulse of the insurance public.

During the 1920s Heath withdrew from daily business at Lloyd's, but his syndicate continued to lead the non-marine market. Heath immediately began recruiting, speaking at recruitment meetings, giving pep talks at Anstie Grange to local men who volunteered, and setting up a recruitment office at Lloyd's where volunteers could be sworn in. In 1915 he was appointed a Trustee of Lloyd's Patriotic Fund, which assists soldiers and sailors in distress and the widows and children of those who have died during military service.

Heath was commissioned, along with Frederick Huth Jackson, Roger Owen, and two others, to create a scheme by which the government could insure the public against losses caused by bombing. It became a first-line hospital, receiving patients straight from the Western Front.

In 1919 Heath joined the Committee of the Labour Department, which allotted funds to enable soldiers and sailors, both officers and enlisted men, to be trained for civil employment. Heath generously aided the struggling piano company, with both business advice and funds, and in 1902 became its Chairman.

In 1891 Heath married Sarah Caroline Gore Gambier (1859–1944).

Upon the death of his uncle Douglas Heath in 1897, he took Kitlands, a small estate near Coldharbour, Surrey, on lease from his father, who had succeeded to the estate.

In 1929 he donated 200 acres near Leith Hill, Surrey to the National Trust for conservation.