Move to limit Lloyd's members' losses: Market looks at options to improve efficiency
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Your support makes all the difference.A PLAN to allow the 20,000 underwriting members of the troubled Lloyd's insurance market to create their own companies with limits on the possible losses they might sustain has been considered as part of the development of a wide-ranging business plan for the market.
The move, if adopted, could signal the end of Lloyd's long tradition of insisting that members are liable to the full extent of their wealth if serious losses occur in the market. With losses expected to top pounds 5bn for the past three years, many members are facing financial ruin under the present structure.
In its efforts to make the market more efficient Lloyd's has been considering other proposals. Underwriting members providing enough financial support to allow pounds 3m of insurance business to be accepted on their behalf may be allowed to deal directly with professional groups running their affairs. They would be allowed to by-pass other intermediaries in the market.
A new company designed to take over the liabilities of stricken underwriting members who are unable to close their books because of financial uncertainties may be set up. Assets of their syndicates could be transferred to the new company, which might have combined assets of pounds 5bn- pounds 7bn.
Lloyd's intends to publish its business plan, the first in the market's 305-year history, on 29 April in an effort to restore confidence.
There are fears that Lloyd's does not intend to take action to meet the financial crisis of the thousands of members facing financial ruin. Those fearing the largest losses are suing hundreds of Lloyd's companies that have been responsible for their affairs.
Trevor Bradley, managing director of the Knightstone underwriting agency group, said Lloyd's should have a priority for ending litigation.
'A plan which does not end litigation and separate the future from the past is akin to building an extension to a house while the house itself is on fire,' he said.
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