It was with a sense of disbelief that many Names will have read the letter from Lloyd's director of communications (14 November, Insurance Times), which is happy to pretend that Lloyd's has a high reputation for the quality of its regulation.
The only part of that letter that bears any relation to reality deals with Lloyd's statutory duties, which says the objects of the society shall be: the advancements and protection of the interests of the society's members (Lloyd's Act [1911], s4) for which purpose the Lloyd's Council has the power to regulate and direct insurance at Lloyd's (Lloyd's Act [1982], s6.1).
It is difficult to see how the council proposes to fulfil these duties without the benefit of a regulatory director or department; with a franchise board composed of largely ignorant individuals; a Prudential Supervision Committee that allows the ever-thinner spreading of the Lloyd's policy; a risk-based capital system that has completely failed to prevent huge losses on the Central Fund (and has been used against Names); an ombudsman system for names which is almost certainly in breach of the Human Rights Act; and a continuing failure to enforce the law of agency.
The FSA's attitude has been not to touch Lloyd's with a bargepole; it has declined to offer any protection for Names. But it does allow Lloyd's to trade with two pages of auditors' qualifications in the Equitas accounts and withouy its own auditors willing to sign off the accounts.
The failure of both proper regulation and management is seen in the current disastrous losses. A decade after the trauma of the last loss period - which at least had the excuse of the asbestos tail - Lloyd's has lost an even greater sum.
One cannot help but feel that Lloyd's would be better off sacking its spin doctors and recruiting someone to regulate it properly.
Charles Ross
London
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