Implementation of radical report's recommendations is set to begin next year

Plans to overhaul Lloyd's could begin as early as 2003, a senior source has revealed.

The plans have been hatched following recommendations made by consultancy firm Bain & Co last Thursday. The proposals made to the Council of Lloyd's, the market's ruling body, recommends the end of Names as providers of unlimited liability and the end of publishing financial figures three years in arrears.

Lloyd's chief executive Nick Prettejohn confirmed that changes to the market prompted by Bain & Co would start in less than a year. But he refused to be drawn on the details.

In April last year, Bain & Co began working with chairman Sax Riley and market representatives to investigate the future of Lloyd's.

Last week it made its recommendations to the Council of Lloyd's. These included abolishing the annual venture, ending three-year accounting and replacing it with a one-year system.

It also suggested an end to Names with unlimited liability by January 2005 and the creation of a new vehicle for private investors. Market sources said this could be a reinsurance syndicate where third party capacity can be provided to the market by a quota share arrangement.

Bain & Co also proposes the abolition of existing regulatory and market boards and committees. It also advocates their replacement with a single franchise board. It is understood that this could begin next year.

An insider said Lloyd's hopes the new board will be created by the beginning of 2003 as it can still exist alongside the Lloyd's Act of 1982. But, said the source, the Act of Parliament may have to be altered at a later stage to encompass some of the other suggestions, like the annual venture.

Prettejohn said an informal consultation stage with market representatives would start shortly and would involve a "thorough debate". Detailed proposals will then be used for a formal consultation, which would then be drafted for Council approval. Finally, an Extraordinary General Meeting for all members will be held in the third quarter.

"This is ultimately about the profitability of the marketplace - the modernity, transparency and efficiency," he added.

"It is all driven by desire to have a more successful, profitable market that is attractive for all people who might invest in it. Everything we have done has been looked at through those lenses."

He also acknowledged that Lloyd's performance over the last few years "has not been as consistent or as good as it should be".

"Clearly we have been through a very severe downcycle," he said.

"But nonetheless we should have performed better as a marketplace. Change is necessary."

The proposals now face opposition by Names who stand to lose their rights to trade on with unlimited liability.