Lloyd’s releases market restructuring “blue print”

Following several years of disappointing underwriting experience, Lloyd’s of London has unveiled a restructuring plan which it hopes will “modernize the market” and create a more comparable financial performance environment with its competitors.

Lloyd intends for the market to be operated as a “franchise of businesses” under the directorship of a “franchise board”. The Lloyd’s market consists of syndicates made up of both individual “names” and corporate members. After several years of devastating results, particularly resulting from asbestosis claims in the U.S., a significant number of individual names were unable to honor their unlimited liabilities, resulting in some highly public suicides. Over recent years, Lloyd’s growth in syndicates has been driven by corporate membership with limited liability.

In future, market syndicates will be monitored by franchise directors who will report to the board. The main objective is to identify problems within the market at an early stage, and thereby take corrective action, says Lloyd’s CEO Nick Prettejohn. As part of the new business plan, Lloyd’s will switch to a new accounting system which will provide for “up to date” annual reporting. The plan also proposes that the unlimited liability of individual names should cease as from the beginning of next year.