Tom Broughton says the Lloyd's reform proposals are a revolution
Love him or loathe him, Lloyd’s chairman Lord Levene has put together a set of proposals with the government that might just drag the London market into the 21st century. So far, it has been the constitutional changes and the longevity of the chairman’s tenure that has received the most attention. But delve into the detail of the Treasury’s 60-page consultation document to reform the Lloyd’s market and there are a revolutionary set of proposals that will remove some of the shackles of heritage that has hindered Lloyd’s from being able to compete with the tax-free havens and its fast growing international competition.
First and foremost, after eight years of talking about it, Lloyd’s has finally realised that access to distribution is the key to its success. If waved through, the proposals would enable all brokers to access the market without the special accreditation given to the traditional Lloyd’s brokers. This would give market a greater breadth of distribution, but vitally removes the added cost implications forced on foreign investors. The second major issue is the relationship between brokers and managing agents. Again, if the proposals go ahead, there will be close association for the first time between the two, and it could mirror the consolidation happening in the wider market. Over the course of the next three months the FSA will have its say in this consultation process. And in a year where it is already scrutinising closely the conflicts of interests in a market fraught with blurring acquisition models, it’s clear that the FSA’s ‘to do’ list may just be getting a little bit longer by the day.
At the time of writing, Alistair Darling was yet to stand up and deliver his first Budget speech as Chancellor. But the shadow financial secretary to the Treasury, Mark Hoban, gives his verdict of the state of government regulation in the insurance market (see pages 14-16). Of course, Hoban promises that a Conservative government would see a better deal, without really differentiating on policies, aside from a pledge to cut corporation tax. And although Hoban sees mandatory commission disclosure as inevitable, as with much of this pre-election rhetoric, the main differences between the parties appears to be ones of style over substance. IT