... but Names threaten more action as they lose out to corporate block vote

Lloyd's radical reforms to modernise the market have been approved by a large majority.

The Chairman's Strategy Group proposals aimed to restructure the market as a franchise, create a new Lloyd's Act, and abolish the roles of director of regulation and the regulatory board.

The vote on the proposals was carried by 80% to 20%, on a capacity basis, by the market's 16,000 members at last Thursday's EGM.

But after the results, the Association of Lloyd's Members (ALM) said that Lloyd's would have to reconsider its regulatory proposals and warned of possible further action.

Lloyd's management's success was widely expected. There was broad support for the proposals, particularly the franchise structure.

The nature of the vote also influenced the outcome. Each member was allotted one vote for every £500,000 of capacity.

This meant corporates, which were in favour of the proposals, were allocated more votes.

Lloyd's chairman Sax Riley welcomed the result: "With 80% backing for these reforms, we now have a decisive mandate to implement our proposals for modernisation. The first stage of our work has concluded; the second stage - implementation - is now underway.

"Lloyd's has set itself a clear goal: to become more transparent; more efficient; strongly regulated and, ultimately, profitable. These reforms provide us with a path to follow. We must travel along that path as quickly and effectively as possible."

Opposition to the proposals had been mounting in recent weeks, with the ALM - and two of the four members' agents, Hampden and CBS, advising their members to vote against them.

Although the Names' groups agreed with the vast majority of the proposals, they opposed the style of the vote, which allowed voting on only a single proposal.

As a result, some members felt obliged to vote against it in order to register their opinions.

Some members objected strongly to the prospect of changing the Lloyd's Act, saying that possible changes in regulation would weaken their market position.

The ALM said that, although the vote was carried on a capacity basis, 3,356 members voted against it and only 1,393 voted for it.

It argued this result would mean Lloyd's would have to "reconsider its controversial regulatory proposals, which in any event have yet to be approved by the FSA" and speculated that there was now little prospect of a new Lloyd's Act.

The ALM said Lloyd's might have to review the regulatory proposals, as Names could call an EGM. This could repeal any by-law enacting new regulatory arrangements, on a one member, one vote basis.

ALM chairman Michael Deeny said: "We would hope the council will use the franchise board to improve the profitability of Lloyd's, and will reconsider the more controversial proposals, such as a new Lloyd's Act."