Lloyd's and the London Market must abandon three-year accounting, warned Groupama chairman and chief executive Tony Lancaster.
Speaking exclusively to Insurance Times, Lancaster said now that investors are coming back to the market, practices must change to show underwriters are accountable on a real-time basis.
"There is a lot of new capital coming into London but it is essential to get the basics right," he said.
"I do not believe the capital providers will be prepared to accept the level of losses the London Market is showing. If underwriters do not give a proper return to shareholders the capital will disappear."
"This means that claims, claims reserves, premiums and debits and all the transactions will be on a real time basis. It will make underwriters much more accountable and disciplined so they haveto be much more accurate."
Lancaster said the World Trade Centre tragedy would force market change as capacity became scarce.
"Since 11 September, far fewer markets are willing to accept reinsurance. Insurers are going to have to write bigger nett lines.
"But this is a good thing as all too often people forget that, through arbitrage, they are having to rely on reinsurance security and stability.
"Consequently the market will return much more to a primary market. It is really getting back to basics."
Lancaster said there will be some retrocession cover available but it will be considerably reduced and will "only go to underwriters who have not abused their reinsurance".
He also predicted the market will be dominated by larger companies in the future.
"The smaller players simply do not have a role to play in the future," he said. "If you are going to be in the London Market, you must be a well financed entity.
"There will be fewer players, but the specialist underwriters will be supported by bigger capital and will have better economies of scale so they can be taken much more seriously.
"There is still a scarcity of good quality underwriters, brokers and claims people. A lot of people have moved out of the market and good quality graduates have been tempted away by other professions."
Lancaster said technology would also become increasingly important.
"Much more will be done using new technology," he explained.
"It will be a face-to-face market to get the lead underwriter. But once that is done, providing that leader has respect, the rest of the world will follow."
But he said in order to take advantage of technology, it would first need to embrace the London Market Principles (LMP), which aim to modernise back office systems.
"Processing needs to be faster and less complicated with less people in the chain," he said. "A lot of things are whirling around with debits, premiums and claims. But if they were joined together, it would be much faster."