The huge underwriting losses that have reduced many investors, or names, to penury were not the fault of David Coleridge, and were incurred before he began his two-year, but renewable, stint as chairman. But the crisis caused by pounds 2bn of losses was aggravated by revelations of incompetence, dubious practice and failure of the internal self-regulating mechanism. The manner in which Mr Coleridge dealt with these matters has not been impressive. Decisive leadership was needed. He did not provide it. Instead, there was a good deal of bumbling, along with U-turns on such crucial questions as the need for institutional reform and the desirability or practicability of helping severely stricken names.
Lloyd's is a place of many traditions, not all of them admirable. One such is that the name of a new chairman emerges from a process of consultation within the organisation's ruling body, the 28-strong council, which then duly elects him (so far, there have been no women). Yet even that was more democratic than the council's decision to invite Mr Coleridge to nominate his own successor. It was bad enough that he reacted to criticism by deciding not to seek re-election himself and see the crisis through. That decision, prematurely announced, threatened to create a vacuum. He was presumably urged to choose his own successor with the aim of filling that looming hiatus. There is nothing objectionable in his choice of David Rowland, chairman of the Sedgwick Group, the largest independent insurance broking company in Britain - though the underwriters who form the professional core of Lloyd's would prefer an underwriter as chairman. Their favoured candidate is Stephen Merrett, chairman of Merrett Holdings, a large agency group.
Mr Rowland is not on the council of Lloyd's, but he did lead a task force that proposed a programme of reforms over the next five to seven years. His critics argue that, admirable though the report's suggestions were, they stemmed mainly from McKinsey and Co, the international management consultants, who were brought in at a cost of up to pounds 2m to Lloyd's.
For all his undoubted qualities, Mr Rowland looks like the nominee of a much-criticised chairman, destined to be confirmed in the top post by a council in which there is also little faith. It is not a recipe for restoring confidence, let alone for assuaging the anger of financially wounded names. It was not surprising that those leading the revolt yesterday saw Mr Rowland as representing 'more of the same'. They reacted by calling for an independent chairman and the resignation of the entire council. At least in their first demand, the rebels are right. The council should think again. The Bank of England, which nominates a proportion of its members, must weigh in to the debate. The next chairman of Lloyd's will be decisive in the history of this ancient institution. His nomination should not be rushed. The council owes it both to external and working members to allow much more time for consultation.