An astonishing 42% of syndicate business plans caused "major validation problems" for Lloyd's franchise board.
Franchise performance director Rolf Tolle told an audience in the market's Old Library today that the board's first business planning process had recently ended.
Giving a lecture for the Insurance Institute of London, he said every syndicate had been asked to produce a plan outlining their underwriting strategy and risk portfolio and forecasting profitability for the year ahead.
He said: "Although a third of plans had to be re-submitted due to technical issues and 42% of plans created major validation problems, I am pleased to report that over two thirds of plans were validated within two days and all were reviewed in time."
Tolle said in a question and answer session that Lloyd's capacity may have to contract dramatically in order to remain profitable when current hard market conditions end.
"If the cycle behaves like the last cycle, we will see a quite drastic reduction, maybe up to 30%, 40% or 50% reduction in capacity," he said.
He added later: "The focus at Lloyd's is on underwriting for profit not chasing market share. The point is that some businesses may need the courage to shrink their businesses considerably to reflect market conditions and the external environment.
"But that will obviously be a decision for them at the time."
