Lloyd's is seeking to turn itself into a magnet for overseas-based brokers with cautious plans to expand access to the 300-year-old insurance market.
Under proposals laid out for consultation, Lloyd's is planning to open the market to a new category of broker which will deal directly with Lloyd's managing agents.
Called sponsored intermediaries or associate Lloyd's brokers, this category could include big international broker firms such as Aon and Marsh or larger UK broker chains.
Their participation in Lloyd's would however, be restricted to a one-to-one basis with the market's 60 managing agents and, their business limited to personal lines and small commercial and motor business. Lloyd's managing agents would in turn decide which non-Lloyd's brokers are introduced to the market.
The move is in response to growing competition from US and off-shore insurance markets, including Bermuda, which have seized a rising share of Lloyd's traditional business.
The way Lloyd's brokers are regulated is also changing, with responsibility passing to the new General Insurance Standards Council.
Meanwhile, Lloyd's existing registered brokers are to retain their exclusive title and rights over the subscriptions market including dealings with Lloyd's managing agents.
But Andrew Duguid, Lloyd's director of development, stressed sponsored intermediaries would not enjoy automatic upgrading to full Lloyd's broker status after this transition period.
They would first have to satisfy certain strict entry criteria, such as a defined level of knowledge and experience of Lloyd's, a prescribed level of errors and omissions insurance and capital of at least £500,000.
Commenting on the proposals Duguid said: "They will shift the relationship with brokers from one that is dominated by regulation and discipline to one on a more commercial basis."
But he stressed the limited nature of the changes: "These proposals are not about opening the flood gates to Lloyd's and lowering our standards. Instead, they mean developing a few well-chosen commercial relationships to give managing agents new opportunities in the UK and overseas."
A two-month consultation period has been set for the plans that ends on December 17, 1999.
The new trading arrangements are due to be implemented sometime in the year 2001.
