Xl Brockbank has lined up with Markel International in setting tougher payment deadlines for London market business.

And Ace Global Markets, which criticised the market's old credit terms as favouring brokers, has introduced stricter trading arrangements..

The moves have prompted the Lloyd's Insurance Brokers' Committee (LIBC) to request an urgent meeting with the Lloyd's Market Association.

Last week, Insurance Times reported that Markel had been criticised for tightening its payment deadline to 60 days, by Dickinson Manchester managing director, Charles Manchester.

Manchester said he feared the new terms could lead to some policies being cancelled for business that came through more than one broker.

However, XL Brockbank underwriting director, James Gerry said his company's 60-day deadline had received widespread support from


He said the decision was due to both the Lloyd's Code for Managing Agents, which came into full effect this month, and the market's appalling cash flow position.

The code, issued in July 2000, warned managing agents not to rely on Lloyd's to assess the creditworthiness of intermediaries.

Although the code said it was “not intended to be a statement of general law”, it advised managing agents to encourage the timely settlement of premiums.

Gerry said speeding up brokers' payments was also necessary to maintain data integrity and accelerated claims payments.

“I'm paying claims on policies where I haven't even collected the premium yet and that can't be sustained,” he said.

“The worst payers are sitting on our premiums and to accelerate pass-through is going to hit them in their wallets because they'll lose the revenue from interest on the premiums.”

Ace chief executive John Charman agreed that most brokers understood why change was needed.

“The only intermediaries we have problems with are those who are dependent on the investment income earned on our premiums to keep their businesses solvent,” he said.

LIBC executive director David Hough said it was preferable for such changes to be made to the industry as a whole, rather than on individual terms.

He said it would have been better for insurers to confront poor payers on a one-to-one basis and said the code could not be blamed for the changes.

“What some managing agents have done is to use it as a reason to unilaterally reduce terms in a way that isn't entirely practical,” Hough said.