Lloyd's has finalised the new syndicate loan system that will change the way in which syndicates contribute to the market's central fund.

Under the new system, syndicates will pay a loan contribution of 0.75% of capacity and an annual central fund contribution of 0.5%.

Under the old system, syndicates paid an annual central fund contribution of 1.25% of capacity.

Lloyd's said the size of the loans payable would be reviewed annually. Market sources said the loans could increase to 2%-3% of capacity by 2008.

The loans will be paid in April 2005 and repayment will be at the discretion of the Lloyd's council.

The majority of businesses at Lloyd's backed the new loan system, the corporation said.