The collapse of The Management Company (London) has prompted Lloyd's to crack down on bogus brokers.
In June, the insurance intermediary was thought to have left up to 150,000 people without travel cover after it issued policies bearing the Lloyd's name without authority.
Lloyd's is currently paying claims from its Central Fund and has indicated it will take action to recover its costs.
But the 300-year-old market is introducing new controls for coverholders – brokers that have been given permission to write business on an underwriter's behalf.
The proposals aim to keep track of those who underwriters delegate their authority to. A new list of between 500 to 750 non-marine UK coverholders will be created.
Lloyd's head of regulation, David Gittings, said: “For the past three to four years, we have been encouraging improvements in the management of underwriting delegation by both underwriters and brokers who place binding authorities. What is clear from the recent difficulties we have experienced over the sale of travel insurance is that, in some cases, underwriting authority is sub-delegated by coverholders and it makes it very difficult to trace who has actually delegated authority.
“We are reviewing the arrangements for coverholders' registration at Lloyd's and we intend to make some changes to both extend the number of people who are required to register with us and to ensure we are both informed about who has actually got delegated authority.”
There are currently around 3,000 coverholders registered internationally at Lloyd's. An estimated 500 to 600 have been previously registered, but are no longer writing binding authorities and are dormant.
“We intend to register non-marine coverholders in the UK who have historically not had to register before,” said Gittings. “We are developing a set of proposals to have a more direct relationship with them.
“No one should be underwriting under delegated authority unless they have contractual arrangements with Lloyd's underwriters.”
