Lloyd's syndicates will need to become smaller and be prepared to reject business, said Lloyd's chief executive Nick Prettejohn.
Speaking at this year's CII conference, he praised managing agents for biting the bullet and turning poor business away.
"The successful underwriters in our market have shown a much greater inclination to shrink their books of business.
"It has been extremely heartening to hear recent public comments by the management of Lloyd's businesses that they have walked away from business - and whole risk classes - because pricing has been inadequate."
He also said Lloyd's was addressing its excessive costs, in particular the amount it spends on lawyers which is "in excess of £500m per year".
He said the market needed an "effort of will" to address the problems of the past. Initiatives such as the mandatory use of LMP, the introduction of the X-changing claims processing system, and the development of the connectivity platform Kinnect should make Lloyd's more efficient in the future.
