LETTER: Lloyd's a victim of US judicial system

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The Independent Online
From Mr J. D. Burrows

Sir: We learn from your paper this week of the fifth successive year of heavy losses totalling some £8bn that is bringing Lloyd's of London to its knees ("Lloyd's denies collapse is imminent", 25 April).

Yesterday you reported ("Lloyd's bosses summoned before House committee", 26 April) that members are to be served with writs by their own agents to pay their share of unpaid debts.

Thus David Rowland, Lloyd's council chairman, sets agents against their principals as he expects those who are able to pay their alleged open- ended and continuing debts in full.

But neither Lloyd's council nor the agents have been able to provide names with evidence that asbestosis and environmental pollution settlements are based on sound interpretation of early policies, where it was never the intent of the underwriter at the time to cover such uninsurable matters, as defined by contemporary insurance principles and practice.

US court decisions are based on the unchallenged judgment of one man, Judge Ira A. Brown Jnr in the San Francisco Superior Court on 24 January 1990. After spending many years considering asbestos insurance coverage cases, he decided that since asbestos particles absorbed in the human body cause injury - setting up disease - employers' annual liability policies covered the event.

Similarly, it was decided that deliberate but lawful dumping of toxic wastes must, by subsequent US government decision, be cleared; and US courts held that employers' liability policies for "accidental pollution", issued years earlier, covered the cost.

Professionals on both sides of the Atlantic are at last recognising that these interpretations of policy wordings, in an effort to meet perceived needs rather than the intent of the parties at inception, is at the basis of the problem that threatens the insurance industry. Meanwhile, millions are being spent litigating the issues.

Unless Lloyd's now takes a lead to stand up to the basic problem and call a halt, rather than trying to keep US customers happy, Lloyd's, after over 300 years, will slide into oblivion - a victim of the US judicial system. Both the UK and the US will be deprived of the revenue they once enjoyed from a business that has served the public need, and may now disappear below the waves.

Yours faithfully,



West Sussex

27 April