The row over the late payment of premiums into the London Market escalated this week after the Lloyd's Market Association (LMA) issued immediate recommendations to its insurer members.
The move is a snub to the Lloyd's Brokers Insurance Committee (LIBC) which had last week urgently called for a meeting with the LMA to discuss the issue.
“We would have preferred to discuss it with them before they issued what they did,” said LIBC executive director David Hough.
He added that the LIBC was sympathetic with underwriters' need for prompt payment but was still considering its response to the LMA announcement.
Insurance Times first highlighted the growing tensions over the issue two weeks ago when it revealed that brokers were unhappy that Markel International had imposed a strict 60-day payment deadline for London Market Business.
One broker, Dickinson Manchester managing director Charles Manchester, said that the new terms could lead to policies being cancelled for business that came through more than one broker.
But the following week, XL Brockbank lined up alongside Markel, and ACE Global Markets also confirmed it had introduced stricter trading arrangements, saying some brokers depended on the investment income they earned by holding back premiums.
It prompted the LIBC to request an urgent meeting with the LMA.
However, this week the LMA has issued a recommendation that all Lloyd's syndicates apply one of the standard premium payment clauses available in the market. It intends to issue a single wording for the entire market “in the near future”.
LMA chairman Stephen Catlin said the association had also launched a project comparing the performance of Lloyd's and major overseas markets in claims settlement, policy delivery and premium payment.
“The LMA is determined to work with Lloyd's to ensure that the market's performance in these areas, at the very least, matches that of our major competitors,” Catlin said.
Reg Brown, the former managing director of Markel Syndicate Management, said that a complete culture change was necessary to make London a world-class market.
“By whatever measure or yardstick you like, standards, and particularly service standards such as the flow of money, are shocking,” he said.
“In this technological age, money moves around the world in nanoseconds. How can anyone suggest that 60 days is too short a period for premiums to be paid to insurers?
“Sixty hours is a distinct possibility and 60 days is an outrageous luxury, irrespective of how many brokers there are in the chain.”