In April, Lloyd's chairman Sax Riley created a strategy group to discuss the way the 314-year-old market could move forward. In January, management consultancy Bain & Co made its recommendations to the Lloyd's Council, suggesting the end of Names with unlimited liability, the annual venture and three-year accounting by 2005.
The Market generally welcomed the proposed changes due to growing fears that Lloyd's will remain too traditional and rigid, losing out to foreign markets like Bermuda.
However, the suggestion that the market should disentangle itself from its original investors has caused controversy. Will the proposal go through, despite facing staunch opposition from the Names?
The recommendations are still at a very early stage and need to go through various consultation phases before they are approved. In the next few weeks, the Association of Lloyd's Members (ALM) will be meeting with Riley and other key players in Lloyd's to try to convince Lloyd's to reconsider its proposals.
However, senior sources have said Lloyd's is consulting investment bank Lazard's and considering appointing another two banks to represent the interests of Names and managing agents.
The sources said that at a private market meeting two weeks ago, it was proposed that the two banks would independently examine the value of unlimited liability Names' underwriting rights and the potential to buy them out.
They would also look at how managing agencies may be involved in buying out unlimited liability Names' capacity and would then work together to agree on a sum.
Lloyd's spokesman Adrian Beeby says: "We can confirm there is a proposal to appoint banks to represent the interest of managing agencies and Names. This proposal will now go forward for consultation as we want to hear the market's views on how a fair valuation can be achieved."
Since the introduction of corporate capital to Lloyd's in 1993, the number of private investors with unlimited liability has plummeted.
In the early 1990s, there were 34,000 Names, but now there are only 2,490. The die-hard enthusiasts that remain are likely to have paid out heavily for recent claims over the past few years and stand to recoup their losses in the current hard market.
ABN Amro analyst George Shippam says: "Those Names that have been through thick, and recently more thin, want to get their pound of flesh back and you can see why they have a case.
"Underwriting conditions for the next 12 months are looking pretty good. If Lloyd's wants to get rid of them, now is the most difficult time to do it, as they want to dig their fingers in and get money back on claims."
Since the World Trade Centre tragedy, premiums on certain lines of business have risen tenfold and exiting the market at potentially one of its most profitable periods in history may seem foolish.
Shippam says rates are likely to stay hard for 12 to 24 months, peaking in two to three years' time. Terms and conditions will also be very tight during that period.
"That is the time you want to be underwriting in Lloyd's," he explains. "If Lloyd's wants to get rid of the Names, it will have to do something substantial for them to give up their completely correct entitlement to benefits in the market."
Names with unlimited liability now contribute approximately 25% of Lloyd's £12.2bn capacity. Many have accepted that the future of the market is corporate capital.
But at the same time, they expect to be paid handsomely for their loyalty and for surrendering their rights to underwrite in the market.
In addition, Names are demanding that they can walk away from Lloyd's without fear of being invoiced in three years' time for claims on open years.
Editor of Lloyd's league tables Chatset, Charles Sturge, says: "It does not in the overall context matter what Lloyd's offers the Names. The Names will not be satisfied with any offer unless they are guaranteed to be taken out of all open years.
"Why should they agree to give up their trading rights in Lloyd's if, when they are forced out at the end of 2004, they have a raft of open years on their lap so they can't exit Lloyd's?"
Sturge believes Lloyd's may have to set up a separate vehicle, like Equitas, to guarantee that Names are reinsured and can end their relationship with the market completely.
Debates over whether years will be left open make it difficult to predict the cost of getting rid of the Names.
HSBC senior insurance analyst Joanna Parsons says Lloyd's may look at auction prices for capacity, but admits: "You just do not know."
Sturge thinks Names could receive 20p for every pound they underwrite. One prominent Name anticipated the sum would be "quite a few hundred million".
However, the deputy chairman of the Australian Association of Lloyd's Members (AALM) has suggested the bill could be much higher.
Patrick Moore, who is also a committee member of the High Premium Group and principal of web advisory service Lisan, says:
"It will cost £5bn to get rid of the private capital from Lloyd's. I want £1.84p for every pound I underwrite."
He estimated his invoice to Lloyd's on 31 December 2004 would be £7m (see top right). This would involve a return of the money he contributed to the Central Fund.
But ALM chairman Michael Deeny thinks finding the resources to pay off existing members will be hard.
"The practical problem is finding the funding, as there is no doubt the Names will expect substantial compensation," he says.