SPECTACULAR losses at Lloyd's of London for the fourth consecutive year in a row will leave names, the investors in the insurance market, facing bills totalling pounds 1.7bn within a few weeks, Diane Coyle writes. Tom Benyon, director of the Society of Names, said: 'The sums now needed are usually only obtained with a mask, a gun and a getaway car.'
Lloyd's reports its results three years in arrears. The market's total loss of more than pounds 2bn for 1991 included an extra provision for the settlement of claims against manufacturers of silicone breast implants as well as the usual typhoons and fires.
David Rowland, chairman of Lloyd's, said conditions had been improving since 1991, and last year the market had traded at a substantial profit. He said that Lloyd's had emerged from its cumulative losses of 6.7bn 'leaner and fitter'.
A big chunk of 1991's losses arose from the need to add 1bn to reserves to deal with extra claims on old policies. The 'long-tail' claims relate mainly to compensation payments for asbestosis and bills for cleaning up pollution in the US. The eventual size of payments on policies that might have been taken out decades ago is unknown, but could run to tens of billions of dollars.
Mr Rowland said Lloyd's had far better reserves than the majority of other insurers. He was optimistic the US government would soon alter legislation on pollution clean-up in a way acceptable to insurers.
Other observers are far more cautious about the long-term losses that could face the market.
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