Heath is credited with 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 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."
[4] He was the fourth of seven children of Captain Leopold Heath,[4][5] a Royal Navy officer who achieved the rank of Vice Admiral, became the Commander-in-Chief, East Indies, and was appointed a Knight Commander of the Order of the Bath (KCB).
[44][45][46] 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.
[51] The original stated purpose of the firm was "to write marine, fire and accident [liability] business and reinsurance".
[19][1][4][53][54] 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.
[61] Nevertheless he immediately cabled his San Francisco agent a now-legendary instruction: Pay all of our policyholders in full, irrespective of the terms of their policies.
[69] 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.
[9][1][51] An additional consequence of the San Francisco earthquake and fire was that in 1908 Lloyd's as a whole adopted Heath's model of a strict and compulsory annual audit of all members' accounts.
[4][19][54][1] All underwriters were required to provide certificates of solvency from approved auditors, and premiums were held in trust accounts for the payment of claims.
While he has been a leader in what may be decided as the most hazardous risks, he has consistently pressed for safeguarding further the financial security of Lloyd's members.
[1][74]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.
[75][27][9] After calculating his risks he offered bomb insurance through the end of the war, raising and lowering his premiums with the intensity of the attacks.
[4] At the outbreak of the First World War in 1914, Heath and his wife were living at Anstie Grange, their 26-room mansion in Surrey that was host to shooting parties, hunts, and balls.
[8][10][79] 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.
[8][80] 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.
[5][10] Dorothy Gore-Brown, a cousin of Heath's wife, was appointed Commandant of the hospital,[10][5] and his daughter Genesta served as its pantry maid.
[83] 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.
[5][4][84][8] In July 1920 he also received a certificate of appreciation from Winston Churchill to hang in Anstie Grange, and an accompanying letter, in acknowledgement of the Army Council's gratitude.
[11][5] Upon the death of his father in 1907, Heath inherited his large country retirement estate Anstie Grange, near Dorking, Surrey, and moved there with his wife and two children.
[10] Heath's wife entertained lavishly, hosting shooting parties, hunts, balls, and other gatherings for London's social élite.
[4] His memorial service was attended by almost every major financial figure in London, and letters of condolence poured in from the U.S. and all over the world.