Commentary: Lloyd's problems won't go away

Next Monday work will grind to a halt in the troubled Lloyd's of London insurance market at a cost of pounds 10m in delayed trading. Members will meet to fulminate on the shortcomings of the council of Lloyd's, the market's ruling body.

Lloyd's is already studying proposed constitutional reforms for its market, requiring a chairman with redefined responsibilities, two new subordinate bodies to the ruling council - one in charge of business development and the other of regulation - and a range of senior appointments which have yet to be made.

These are unfortunate distractions at a time when Lloyd's faces its most serious business crisis in more than a quarter of a century.

When Lloyd's studied its own future for the next five to seven years and published its findings in a report earlier this year, it concluded that ways needed to be found to strengthen its capital base and improve its competitiveness.

Yet these vital considerations have been dwarfed by proposals suggested for the future government of the market, contained at the end of the same report.

These proposals for the change of government are being relied on by some of the dissident underwriting members, who are seeking to suborn Lloyd's into providing some form of relief for their losses, to support their case.

What the members should realise is that changing the public face of Lloyd's will not alter the business predicament of the market. Lloyd's is in recession, along with other insurance companies. Its capital base, the wealth of the members, has been eroded and cannot afford to pay claims. More losses are looming.

The top may be changed at Lloyd's, but the underlying business fundamentals remain the same. As a priority Lloyd's business approach and capital needs must be addressed.