View from City Road: Doubts about Lloyd's are not dispelled

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The headline on one of the press releases from the Lloyd's of London insurance market yesterday was 'Fresh confidence in Lloyd's future - Chairman'. To which the response must be: 'Continuing doubts about Lloyd's past - Names.'

Proposals from Lloyd's to strengthen its members' rights, to introduce risk-rating of syndicates, and to foster trading in syndicate participations can only be welcomed. The only problem is that it is too little too late. There's not much point in preparing for the future if the market is about to be swamped by a deluge of US pollution claims.

Nearly all the reforms proposed are eminently sensible. After all the abuse, it is absolutely right to introduce measures to improve the market's transparency. Reducing the powers of managing agents to decide who participates in their syndicates is a good thing too, as is giving names some control over the growth of their syndicates' underwriting capacity.

In future, it will become necessary for Lloyd's members to put up more money to underwrite on a high-risk syndicate writing liability insurance than on a low-risk motor insurance syndicate. This will make explicit the risks investors are taking on. They will no longer be able to claim that their LMX syndicate was part of a low-risk portfolio.

Perhaps most significant are still- shadowy plans to allow investors to buy and sell their 'stakes' in syndicates. A market in these participations - albeit an illiquid one - will help investors to keep an eye on which underwriters are well regarded and which are not.

The reforms also envisage corporate syndicates that will be, to all intents and purposes, insurance companies. All very sensible and reassuring but with problems like those faced by Lloyd's you have to wonder whether the market is going to survive long enough to reap their benefit. And if the market is merely going to become a market full of insurance companies, what's the point of having one at all? We've already got that in London.