Who are the grumblers trying to protect?

It’s not easy pleasing everyone, particularly when you’re as complicated as Lloyd’s.

The corporation has 46 managing agents to keep happy, who in turn have investors and shareholders to please.

Little wonder then that the market has a few “grumblers” with so many interests at stake, although Lloyd’s has probably learned to live with the earache after 319-years dealing with a cacophony of complaints.

The latest rumbling of discontent is over the way the Franchise Performance Directorate (FPD) is handling capacity growth in a softening market. It is regarded by some as the first real challenge the FPD has had to face.

Lloyd’s defence is that it has a “rigorous” process for admitting new business and that its standards for admission are high.

News that Montpelier Re is the latest company to be sworn into the exclusive club won’t help quell those concerns around the intake of a further £400m of capacity in the last 18 months.

It simply stokes the grumbler’s argument further.

They will feel more justified in questioning the FPD’s strategy on cycle management, as the Montpelier Re class of 2001 reinsurers pours another £47m into the pot.

It’s a modest amount, but if market conditions allow, it will increase to £143m in 2008 and fire up competition in the non-marine property and engineering classes, as well as specialty casualty business sourced from the London, US and European markets.

Given the chaos unraveling in Bermuda over accusations of corruption in the government and the heightened interest of Bermuda reinsurers to enter the Lloyd’s market, supporters of capacity growth believe this is a ripe time to take advantage, open the market up and stir up competition.

“Wouldn’t it be good if we could keep the market all to ourselves?” jokes one senior Lloyd’s source. “But, Lloyd's would find it very difficult from an EU/competition perspective to deny access where the acceptability criteria are met or to raise unreasonable barriers to entry like high costs, on the grounds that existing market players don’t want the competition.

“In any event the experience of the banking and financial sector in the UK generally is that if you open your doors to allcomers and accept competition, your industry flourishes. Therefore, overall I’m for openness.”

Some may feel that Lloyd’s is a bit too open in the current climate, but the fact that it turned down the likes of Leinster’s syndicate, because it leaned too much in favour of catastrophe-led business, demonstrates that it does impose a rigorous process for admitting new business.

One has to wonder whether the grumblers’ concerns centre round a real desire to protect the market, or simply protect themselves from the competition of others.

While exclusivity is what makes Lloyd’s so appealing, it is that strength of ownership that threatens to stunt the market’s growth.