The president and chief operating officer of Markel Corporation has slammed Lloyd's for its "pervasive institutional arrogance".
Speaking at an Insurance Institute of London lecture this week, Tony Markel said the mood of the 300-year-old market "belies logic and, frankly, is totally unsupported by results".
Markel, who has spent 42 years in the insurance industry, argued Lloyd's must change "as soon as possible" to survive.
"What are we so proud of?" he asked. "Underwriting results are awful. Based on the latest estimates I've seen, Lloyd's will have lost almost £6.5bn for the five-year period from 1997 through to 2001."
Markel described lawsuits and allegations of mismanagement as "rampant", with costs continuing to be "of grave concern" and spoke of "awful" client service.
He accused Lloyd's of squandering its chance to put its problems behind it. "Hell, you got a `clean slate' in 1992 with the formation of Equitas... And it took you less than a decade to totally screw it up again," he said.
"If basic, sweeping change does not come soon, the future of Lloyd's will be in serious question."
Markel called for the end of Lloyd's three-year reinsurance to close process - "which is a joke".
"At its worst it gives the named underwriter a licence for creative accounting, depending on what results he wants to show," he said. "At best, it forces a calculation of ultimate losses well before any degree of accuracy can be achieved, creating the quintessential SWAG (or scientific wild ass guess)."
Markel also called for a tightening up of policy wordings. He said since his company joined Lloyd's two years ago through the acquisition of Terra Nova Insurance Company, he had been involved in 20 times the number of disputes than he had seen in his previous 40 years in the business.
"The sloppiness, lack of clarity, delays in documentation and poor business practices are appalling," he said.
Markel also called for Lloyd's "antiquated" regulation to be "totally re-thought and re-focused".
"They [Nick Prettejohn and staff] seem to spend an inordinate amount of time and resources on meaningless bureaucratic minutiae, while ignoring important issues that threaten the financial security and reputation of the market".
Commenting on the "evils" of delegated authority, Markel said: "For every success story, there are 20 horror stories. Even the most well-meaning broker is not going to underwrite to the standards that your own underwriters will.
"I'm totally in favour of giving our channel partners, the agents and brokers, the necessary tools to be responsive and provide outstanding customer service. But I don't want them making underwriting decisions on our behalf."
He also described standards achieved in premium and claims payments and policy production as "abominable".
He said: "We feel Lloyd's has the opportunity to continue, and enhance, its pre-eminence in the world's insurance marketplace.
"But if Lloyd's doesn't deal promptly and effectively with these issues, not only will it not prosper, but it may not survive."