Entry at Lloyd's and early innovations 1878–1905 In 1878, at the age of 18, Heath became a clerk at Henry Head & Co., a firm of brokers and underwriters at
Lloyd's of London. 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; 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. By the 1930s his annual income was estimated to be £60,000 (), and his syndicate was underwriting for 300 members. ==Civilian services during the war==