Dispassionate analysis of the facts would appear to bear this out. As a ruined Name myself, my feelings fluctuate daily between worry for the future and the desire for recompense from those who have caused these problems. I have been in flux for a couple of years now; it is like living in a permanent state of bereavement. Almost weekly I receive correspondence about something or other to do with Lloyd's. Most of it is standard information circulars or notification from one of the many action groups I am involved in.
Sometimes I get letters from the Names' agent, threatening dire consequences and legal action if the money is not forthcoming. In the same breath, with the utmost consideration, the agency informs me that there will be nothing to worry about if I come to an accommodation with Lloyd's. How thoughtful of them.
Dealing with all this correspondence is exhausting and time-consuming. I have lost count of the hundreds of letters that I have written to action group secretaries, lawyers, accountants and agents, as well as the thousands (this is no exaggeration) of telephone calls made. And, of course, with every letter that I write, there is the inevitable response that needs filing, cross-referencing and in some cases replying to.
These bureaucratic demands on their own are just about endurable, though they would test the patience of Job. It is the sense of hopelessness and guilt that is so destructive. One mulls over in one's mind the stupidity of ever getting involved with Lloyd's. The sense of demoralisation is compounded by smug comments made by Names not in this plight and others who are not members at all, yet profess to have rejected the opportunity of joining due to their foresight and objection to unlimited liability. Schadenfreude?
These complacent sentiments really get you down. The 'I told you so' syndrome and comments such as 'You were aware of the risk you were running' only make one feel worse, while suggesting that they were either very smart or extremely lucky. I have lost count of the times I have said to people that unlimited liability was explained to me by my agent as theoretical: 'Like a meteor hitting London - an act of God, nothing more serious than that.'
I was introduced to my agent, Kingsley Underwriting Agencies (now renamed Lime Street Underwriting Agencies) by a member of Wimbledon, as many of my tennis compatriots were. In 1983, the man buttonholed me in one of the bathrooms after I played my match at Wimbledon, and proceeded to explain the benefits of membership. Human nature being what it is, with that lure of apparent easy money, one became mesmerised by the Lloyd's myth and sought to know more about it.
He then took me up to Lloyd's to meet Mr Robin Kingsley (another Wimbledon member) and chairman of Kingsley Underwriting Agencies. His agency has now gone into bankruptcy (I believe that this was the only Names' agency to do so). Its affairs are in the hands of receivers, who are scrutinising his conduct and that of his directors.
Only time will tell if the Names are liable under their underwriting agreements to pay the policy holders if negligence is proven. Lloyd's would have you believe that is the case and that the Names are responsible for the residue of the losses beyond the errors and omissions cover. Well, they would say that, wouldn't they? Perhaps, as with the 'pay now, sue later' provisions of the underwriting agreement, the commercial court will overrule Lloyd's in this regard, too. But if the Names directly on these syndicates aren't responsible for the losses, who is?
There have been rumours of a 'market solution' to alleviate the misery of the worst-hit Names, but nothing serious has been put forward. The Lloyd's business plan introduced recently sets out a completely new strategy for the organisation but does not address these problems. Implicit in it is an admission of its failure as a regulator and that it has permitted its Names to be ripped off by 'wide boys' and the negligent. According to the plan: 'Lloyd's current problems are in large measure self-
inflicted - underwriting standards for some syndicates were too low for too long . . . Members have been rightly critical of our performance . . . Market practitioners must not profit at the expense of the society as a whole.'
Ninety-five per cent of the 'catastrophe losses' affecting Lloyd's in 1988 fell on 12 syndicates and, in 1989, 79 per cent fell on 14, according to the Walker Report on Lloyd's organisation. I, unfortunately, am in several of them. Sir Patrick Neill, who investigated the ill-fated Feltrum Syndicates, summed it up in his report in October 1992, when he stated that 'the reinsurance spiral operated in the event of a catastrophe so as to negate the basic principle of insurance, which is a spreading and sharing of risk, and instead focused the losses on to a few.'
Mr Justice Saville, the high court judge in charge of the commercial court, went one step further, questioning whether the spiral was insurance at all. Underwriters, despite being warned as far back as April 1988 about the time-bomb ticking beneath them in the event of a catastrophe, continued to reinsure themselves with one another, creating a massive spiral in the event of a disaster. Will this be judged by the courts to be a violation of agents' fiduciary care under the underwriting agreement to their Names?
Lloyd's do not even claim any defence in this matter; they negated their regulatory role. Remarks made in the Lloyd's business plan and various reports confirm what had been suspected and alleged for a long time, that Lloyd's had failed in its duty of regulation. Yet they do nothing to put right the wrongs of the past. No wonder one resorts to litigation as the only method of breaking this impasse. I understand now what Ian Hay Davison (deputy chairman and chief executive of Lloyd's from 1983 to 1986) means when he stated that he found it wasn't a case of just one rotten apple in a barrel at Lloyd's but that the whole barrel was tainted.
I have learnt that there are many irregularities, a lot of deceit, secrecy and insider dealing in the Lloyd's market. How else can one explain the more favourable position that working Names have enjoyed over the external Names over a 10-year period? I would advise anyone considering joining to think again.
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