Syndication

Syndication spreads a risk too heavy for one carrier among several, each of whom takes a bearable share; the sum of the shares covers the uncoverable. It was born in the London coffee houses, around the slip: each underwriter wrote their name beneath a line, with the percentage accepted. The move solves two problems at once. Each carrier can bear its share, and its exposure diversifies automatically. Syndication still structures the placement of large industrial risks and, beyond them, the whole architecture of coinsurance and reinsurance. The sinking of the Titanic showed its power: the loss, spread among some sixty syndicates and a dozen companies, was absorbed without any carrier collapsing.