Derivation of the Term Underwriter

October 2nd, 2014

old historical ships

I was on vacation recently in London. On a tour, I heard an interesting story about how the term underwriter came to be. The term has to do with the insurance company, Lloyd’s of London, and dates back to 1688! We all know about mortgage underwriters and how it’s their job to underwrite the risk of the loan. Then they either approve or deny each loan application.

The tour leader told us that Lloyd’s started as Lloyd’s Coffee House. It was opened by Edward Lloyd around 1688 in London. This establishment was a popular place for sailors, merchants, and ship owners, and Lloyd catered to them with reliable shipping news. The shipping industry community frequented the place to discuss deals among themselves, including insurance.

The word “underwriter” is said to have come from the practice of having each risk-taker write their name under the total amount of risk that they were willing to accept at a specified premium for each event. These individuals would literally write their names under the text describing the event for which Lloyd’s was assuming some risk. Hence, the term “written under” or underwriting.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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