The European Commission investigation into the UK government's regulation of the Lloyd's market will step up a gear today as hearings commence.
The investigation aims to determine whether the government complied with a 1973 EU Directive stipulating that governments check the solvency levels of insurance undertakings.
Lloyd's Names have pressed the case in a bid to recoup compensation for losses in 1980s.
Allegations centre on whether the government did enough to check that Lloyd's had enough assets to cover its liabilities in the wake of asbestos losses in the 1980s.
An EC statement said: "The commission still has concerns about the current regulatory and supervisory framework."
It added the investigation will now focus on verification of Lloyd's accounts and internal Lloyd's rules.
Conservative spokesman on petitions, Roy Perry MEP, said: "The 1973 EU Insurance Directive was only transposed into British law in 1982, four years after the final deadline for doing so. Quite clearly questions remain about whether it was applied properly and many 'names' at Lloyd's have suffered very serious financial damage."
"They have every right to ask whether all the proper regulations were in force. If they were not then the knock on effect of successful infringement proceedings could be very serious indeed for the UK Government."
