Requests by Lloyd's syndicates to increase capacity next year are unlikely to be approved in full, warn rating agencies.
Speaking at the Monte Carlo Rendez-Vous, market analysts said capacity would rise from £11bn this year. But it was unlikely that requests to increase the amount of business written next year to £14bn would be agreed in full
Last month Insurance Times revealed that Lloyd's is facing a potential crisis as some insurers have reached their limit for this year's account and have had to reject risks following rate increases of up to 400%.
Senior director at Fitch Ratings, Greg Carter, said brokers may suffer as some insurers take advantage of the hardening market.
"Total brokerage commissions have risen sharply in recent years," he said. "Brokers are now struggling to justify their fees by finding suitable prices and terms and conditions for their clients."
Standard and Poor's financial services ratings director Rob Jones added: "This is not so good for the brokers but conditions are good for insurers and reinsurers. They are putting in more clauses into contracts, having exclusions and tightening up terms and conditions."
Lloyd's has said that if all pre-emptions are agreed, the total capacity of the market would soar to £13bn. But leading market analysts disagree.
Fitch Ratings director David Wharrier said: "That figure seems quite high based on losses that are coming through. I think it will be between £12bn to £12.25bn.
"We currently have 108 syndicates. With mergers and acquisitions to take advantage of premium increases to help with capital, that number will probably drop to between 90 and 95."
Managing agents have already begun to merge syndicates and last month Markel brought its four syndicates under one umbrella.
Moody's Investors Service's vice president Dominic Simpson said: "We have always seen consolidation with the number of syndicates dropping from 123 for 2001. Next year it will fall below 100 ."
Rob Jones added: "It would not be surprising to see a 20% fall-out by the end of this year."
