Lloyd's has drawn up plans to revolutionise its 318-year-old structure to encourage more private capital to invest in the market.

A thorough review has been carried out by the market in a bid to turn around a significant decline in the number of Names investing in Lloyd's in the past 10 years.

In 1996, 12,901 private capital members provided £6.95bn of market capacity. By 2006 it had slumped to 2,097 with members providing £2.35bn.

Chairman Lord Levene said it was clear that the current system allowing private capital investment was "not a sustainable model for the future".

"To succeed it must be flexible and subject to the normal forces of commercial negotiation and innovation," he added.

The report, which has been compiled following extensive discussions with a significant number of market participants, has identified two alternative models to modernise the way in which private capital can be invested in Lloyd's.

The first is a more flexible agency agreement between syndicates and Names and the second special purpose reinsurance syndicates, which will allow private investors to participate in underwriting risks indirectly.