Bank gives advice on reform programme

THE BANK of England is playing a key role in attempting to resolve the troubles of the Lloyd's insurance market.

Officials at the Bank are advising Lloyd's on the implementation of a major reform programme and the appointment of a new chairman of a regulatory board for its market and a new chief executive.

The changes, proposed last month by Sir Jeremy Morse, chairman of Lloyds Bank, are the most sweeping constitutional reforms in the market's history.

'It would be surprising if the Bank had not given its views on how things should proceed,' a Lloyd's spokesman said.

Sir Jeremy has proposed that Lloyd's ruling council of 28 should be reduced to 14 with most of its powers for the day-to-day running and regulation of the market delegated to two boards: one responsible for regulation and the other for the business development of the community.

The business development board would be run by no more than 16 individuals while the regulatory board would be run by 14, according to Sir Jeremy.

Alan Lord's successor as chief executive will need to receive the approval of the Bank of England before his appointment, a procedure that has been adopted since the post was created in 1982.

But the new chairman of regulation, proposed by Sir Jeremy, will come from one of the four leading City figures from outside the market's membership - who will sit on the main council.

All four members, including the chairman of the regulatory board, will have their appointments approved by the Governor of the Bank of England.

As officials at Lloyd's continued to work out ways to implement the proposals, controversy continued about the appointment of a new chief executive to succeed Mr Lord, who retired last month.

David Coleridge, Lloyd's chairman, has indicated to friends that he does not intend to stand for re-election at the end of this year.

Members are dismayed that the choice of chief executive is going ahead without the approval of Mr Coleridge's successor.

Two front-runners are emerging to succeed Mr Coleridge.

David Rowland, the insurance broker who proposed the reforms for the market, and Stephen Merrett, a senior Lloyd's underwriter.

Both men have yet to declare their intention to stand, but pressure is growing on Lloyd's to avoid a power vacuum ahead of a critical vote among members about the market's conduct of their affairs on 27 July.