In the 1980s, Lloyds of London insured satellites, rock singers' voices and the legs of sports stars. Everyone was having fun and making money - but disaster was just around the corner.

Lloyds had always operated on the principle of unlimited liability - so the people backing up the insurance policies were expected to pay over all their assets if required. That hardly ever happened - until a series of huge claims hit Lloyds and the insurers suddenly faced huge bills that threatened to destroy the whole operation and the wider economy.

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Edward Lloyd opened a coffee shop near the River Thames in the 1680s - it became a place where ship owners and money men rubbed shoulders and a trade in marine insurance sprang up.

The coffee-drinking insurers eventually decided to form an association and agree on a set of rules - and so Lloyd's of London was born. It became a key factor in keeping the global sea trade going, but soon branched out into insuring against burglaries, hurricanes and even earthquakes.

Lloyds developed a principle that seems odd today. It ignored the small print and said: "Pay all our policy holders in full, irrespective of the terms of their policies.”

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Hello Business History listeners! We'd like to share an episode from a show you might enjoy. SNAFU with Ed Helms, now in its fourth season, dives into the world’s greatest blunders, the jaw-dropping fiascos and “you can’t make this up” moments that somehow steered history off course.

In this episode: Adam Grant joins Ed to uncover a certain financial fraud deployment that has haunted unsuspecting victims for decades. They head to the top of this pyramid, to unveil the origin of the ultimate form of foul play: The Ponzi Scheme.

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