Brokers with less than £3m of fees may be forced out of Lloyd's because of tougher premium payment deadlines.
Lloyd's regulation director David Gittings would not confirm the £3m figure, but said: “There are a number of brokerage firms who rely on interest payments on premiums”. He added that some firms could find it difficult to survive without this income.
Meanwhile, small to medium-sized brokers fear that, while they are forced to comply with the new deadlines set by agencies such as Markel, XL Brockbank, Ace Global and, most recently, Kiln, larger brokers will ignore these.
Besso boss Colin Bird predicted that agencies who could not afford to cut ties with the big brokerages would do payment deals with them.
Alwen Hough Johnson chairman Hugh Price agreed smaller brokers who paid on time were at a disadvantage.
He said a combined approach by agencies was needed to give teeth to the new rules and force large brokers to comply.
The hardening market and Lloyd's Code for Managing Agents has spurred agencies to set stricter payment dates.
In earlier years, the market had successfully policed payment through the Late Settlement Review Committee. However, this system of voluntary fines was broken when Marsh refused to pay a record £100,000 fine.
Reg Brown, ex-managing director of Markel Syndicate Management, said these large brokerages were able to comply with far tougher payment deadlines in their international dealings. He called the late-payment mentality at Lloyd's a “historical albatross” and said it had to change.
Gittings agreed that brokerages must pay as efficiently in Lloyd's as they did abroad.”It's human nature to exploit a position of strength, but it doesn't necessarily reflect well on them,” he said.
