Markel chief executive and president Tony Markel said he was encouraged by progress at Lloyd’s but that much remained to be done and a softening of rates would be “unbelievably premature”.

In a speech to the IIL in 2000, Markel said: “Structural, fundamental, gut-wrenching change is going to be necessary for Lloyd’s to survive, let alone realise its full potential in the global economy.

Reviewing the progress made so far, Markel said: “There has been tremendous progress under the strong, focused leadership of Lord Levene, Nick Prettejohn, Roger Sellek and Rolf Tolle.

“We are encouraged by their direction and, in particular, the early signs of discipline being demanded by the Franchise Performance Board.

“Much has been accomplished but much remains to be done. And the toughest test is ahead of us.

“Any softening of the rate environment now would be unbelievably premature.

Markel said good progress had been made with the introduction of LMP slips, the reduction in the operating expense of doing business at Lloyd’s, the formation and focus of the Franchise Board, and the new rules covering delegated underwriting.

However, he pointed to several areas which he believed still needed serious attention. They were terms of trade, reinsurance, catastrophe monitoring, claims administration, service standards and pricing.

He described service standards at Lloyd’s as “abominable”.

On the subject of claims administration, Markel said: “"One of Lloyd's weakest links lies in claims administration and reserving. Cumbersome, time-consuming processes and the heavy dependence on outsourcing have created a bureaucratic, inefficient process that results in questionable claims control and unacceptable delays in reserve establishment and claims payment.

Markel issued a warning to the market about under-pricing risks. “Don't be prematurely and naively lulled into a false sense of security as a result of the early returns from 2002 and 2003.

“Continue to get adequate prices for your product and every insurer, broker and insured alike will benefit from the long term stability and continuity of the marketplace.