Commentary: Lloyd's running out of time

Lloyd's of London, once the proudest of insurance institutions, is lurching deeper into crisis. The market's authorities are expected to report losses of up to pounds 2bn this year.

This figure would be remarkable except that last year Lloyd's reported losses

of pounds 2bn and in 1991 losses of pounds 500m. By any standards of business practice, including the variable standards of the insurance industry, that performance in such a brief period of time is little short of disastrous.

If Lloyd's were a joint stock company, shareholders would demand that the directors be fired and would be calling for a full-scale Department of Trade and Industry inquiry into the background of the losses. Lloyd's is different. It regulates itself, being accountable to the DTI only on matters concerning financial ratios.

Despite its freedoms, Lloyd's in the past year or so has been obliged to respond to political and public pressure to deal with its trading problems. The management has been strengthened under its own private legislation dating back to the 1870s.

There is brave talk before the 20,000 members, who provide Lloyd's with its money to function. New managers whistle hopefully that help for losses may be on the way. But the divisions about the scale of any likely assistance from the Inland Revenue or elsewhere only show how rash Lloyd's would be to rely upon a beneficent deity for a solution.

Lloyd's is still short of a plan. Unless it finds a way to reconcile its ambitions for the next few years with a sensible plan to raise money to fill the gap left by defaulting underwriting members, it may not have a future. Those providing capital need complete confidence that their interests will be protected. Time is not on Lloyd's side.