Lloyd’s of London has published proposals for reform that will transform it into a modern, transparent and profitable marketplace.
In a 56-page consultation document, which goes out to some 16,000 businesses and individuals, the Chairman’s Strategy Group sets out detailed proposals for change, which have won widespread support inside the market during six months of informal but intensive consultation.
Lloyd’s Chairman Sax Riley, who leads the group drawn from all sections of the market, said, “This document sets out in detail the map to a new Lloyd’s. The proposals we are formally consulting on now are sweeping, but sensible. They represent the best opportunity of transforming Lloyd’s into a modern, transparent and profitable market. Everyone involved in this market, from investors to policyholders, wants to do business in a competitive and disciplined environment. No one wants a repeat of the substantial losses we have had in recent years. So standing still has never been an option. Businesses inside the market are now uniting around a common goal of reform. And now is the time to reform—trading conditions are at the strongest they’ve been in a decade and investment is at an unprecedented high, with record capacity of over $18 billion.
“The Lloyd’s market has bounced back strongly from the dark days we all shared following September 11. However, that success does not mean reform can be put on hold.
“When we announced our reform ideas in January, we began a detailed informal consultation across the entire market. Some ideas have evolved and others strengthened. We have listened. Now we have proposals that have been thoroughly tested and have backing from the membership. We are clearly at a turning point in the 314-year history of Lloyd’s, and we are calling on everyone who wants Lloyd’s to prosper and London to remain the capital of the global insurance industry to get behind our reforms and help us deliver them.”
Chief Executive Officer Nick Prettejohn added, “At the heart of these reforms is the creation of a franchise, a new partnership between the businesses in the market and Lloyd’s, which runs the market. In the past a minority of poor performers have run up damaging losses, and we all paid a heavy price. He continued, “The proposals we are announcing today allow us as the future franchisor to monitor and guide the franchisees—the businesses in the market. A Franchise Performance Director reporting to the new Franchise Board will lead the drive to raise business standards and identify business problems before they damage the market.
“We are by instinct facilitators, and will help underperforming businesses to change. Where there is no change, and where business failure threatens the market’s security and profitability, our responsibility must be to intervene decisively. In extreme cases, we will have powers ultimately to eject those failing businesses. The overwhelming majority of market businesses want us to take on that role.
“The franchise proposals seek to improve market profitability. Equally important are our proposals on annual accounting which seek to improve our transparency by increasing the ability of clients and investors to compare our financial performance with that of our peers.
“Taken as a whole, these proposals are a major step towards the modernization of the market.”
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