Select Committee on Regulatory Reform Sixth Report

Annex 1

Organisations with an interest in Lloyd's

Annex B to the Explanatory Document gives a full list of those who were consulted about the proposed LRO, and Annex C gives details of those consultees who responded to the consultation.

As Lloyd's noted in its formal response, the Chairman of Lloyd's wrote individually to every member of the Society on the day that the consultation was launched, drawing their attention to the fact of the consultation and giving details of how they might make their views known to HM Treasury.

In drawing up the list at Annex B, the Treasury's aim was to ensure that anyone with any kind of interest in Lloyd's should be aware of the consultation as soon as possible after 7 March 2008 and should be in no doubt as to how, when, and to whom, they should make their views known. The Treasury wrote to all the main representative organisations in the Lloyd's market and, separately, to all individual brokers, underwriters, members agents, corporate members and advisers to inform them of the consultation. It also wrote to a number of individuals who had previously asked to be kept informed about the changes.

Table 1 below sets out the aims and functions of the various bodies representing individuals, associations and organisations with a specific interest in Lloyd's, who responded to the consultation, or to whom the Treasury wrote to inform them of the consultation..
Table 1. Name Aims and Functions
Association of Lloyd's Members

The Association of Lloyd's Members is the main representative body for Lloyd's Names (i.e. those who provide third party private capital), whether these are sole traders with unlimited liability, or individuals/groups who have set up limited liability vehicles.

Names currently provide £2.4 billion of capacity to underwrite in the Lloyd's market. The ALM represents around 1,200 actively underwriting members, between them representing 92% of the £2.4bn capacity provided by Names.

The ALM's stated aims are:

  • To fight for the rights of Names.
  • To maximise the income of members from their underwriting and to increase the value of their capacity.
  • To work for the creation of a more dynamic and profitable Lloyd's.
  • To preserve the position of members as substantial providers of capital to Lloyd's.
  • To ensure a level playing field for all participants in the market.

To defend the interests of members no longer underwriting.

High Premium GroupThe High Premium Group was set up in 1994 to represent the interests of Lloyd's Names who underwrite large amounts and who want to continue as sole traders with unlimited liability. The criterion for membership is underwriting of at least £1million. Many members of the HPG are also members of the ALM. The HPG currently has about 300 members, including NameCo's and LLP's as well as unlimited liability individual members.

The HPG has no official status within Lloyd's, but is regularly consulted about any proposed changes in the Lloyd's market that are likely to affect members. The HPG does not regard itself as providing advice to members, but rather as a source of information and as a forum where members could meet to discuss syndicate performance and market developments.

Cotesworth Action GroupThe Cotesworth Action Group is a Names action group comprising certain Names who participated on Lloyd's syndicate 535 for the 1999 - 2001 years of account and Lloyd's syndicate 536 for the 1999 year of account. The underwriting agent of these syndicates was Cotesworth & Co which is now in insolvent liquidation.

An application by the action group for compensation under the Lloyd's Member's Compensation Scheme is currently stayed following a preliminary decision of the Member's Compensation Panel in December 2006, pending the action group obtaining the necessary judgment establishing fraud and dishonesty, as required by the Panel.

Names Action for Compensation and Defence in Europe
A Names action group which challenged the UK Government for failing to take the necessary steps to regulate Lloyd's in accordance with EU law and for not properly implementing EU directives. In particular NACDE has brought a claim for damages against the UK Government for losses caused by its alleged failure to implement the EU Insurance Directive between 1976 and 2001. The claims included:
  • alleged failure to implement requirements relating to conditions by which insurance could be underwritten at Lloyd's/monitoring of those requirements;·
  • alleged failure to ensure that there was in place at Lloyd's an adequate system of accounting to ensure that assets/reserves were sufficient to meet liabilities.

NADCE's claims against the Government were dismissed by Mr Justice Langley on 8 November 2006. An appeal against that judgment was unsuccessful. The House of Lords refused permission to appeal.

NACDE is chaired by Christopher Stockwell, a well known and active critic of Lloyd's who has been a prominent figure in proceedings brought by Names against Lloyd's (particularly through his involvement with the UNO). Mr Stockwell is also Chairman of the LNA. NACDE (and its sister organisation, LNA) also undertake various lobbying activities. These have included an attempt to seek the EU Parliament and the EU Commission to investigate failures by UK Government to properly regulate Lloyd's from 1973 to date. The Commission decided it did not have grounds to bring formal action.

Lloyd's Names Association ("LNA") (previously the Lloyd's Names Associations Working Party (LNAWP)) A Names action group which has, since the early 1990's sought to obtain compensation for alleged deficiencies in the regulation of the Lloyd's market.

The Chairman of the LNA is Christopher Stockwell (see section on NACDE above).

Lloyd's Market Association

The Lloyd's Market Association is the main representative body for Lloyd's Underwriters. All Lloyd's managing agents are members of the LMA.

The LMA's overall objective is to identify and resolve issues which are of particular interest to the underwriting community and, working in partnership with the Corporation of Lloyd's and other partner associations, to influence the course of future market initiatives.

The LMA's specific aims are:

  • To provide information on the major issues and initiatives which impact on the underwriting community as a whole.
  • To provide information on the work being undertaken on Lloyd's and London market claims initiatives and issues by the LMA Executive, Business Panels and Committees.
  • To support the development of efficient and cost-effective business processes in the Lloyd's market
  • To monitor and assess the potential impact of developments relating to accounting, reporting, taxation and other financial and regulatory matters which may affect managing agents and syndicates.
  • To strengthen the work of LMA Members in continuing to "raise the bar" of professional standards, with particular emphasis on training and education.
  • To lobby and respond to public and regulatory consultations, to assist with the drafting of market wordings and commissioning legal advice to assist our members to understand and interpret regulations, laws and bills.
London Market Insurance Brokers' Committee

The London Market Insurance Brokers' Committee is the main trade body, representing the interests of accredited Lloyd's brokers operating in the London and worldwide insurance and reinsurance markets. Its members are responsible for handling in excess of £25bn of premiums through the London Market and many billions more across the World. They generate some £2bn of invisible earnings to the UK economy each year. 148 of the current (as at 23 July 2008) 166 Lloyd's brokers (i.e. 89%) are members of the LMBC.

Lloyd's Insurance Brokers Association was formed in 1910. Following the promotion of the Insurance Brokers Registration Act in 1977, LIBA agreed to join with the other insurance broker trade bodies to form the British Insurance Brokers' Association. However, the LIBA, now renamed the LMBC (London Market Insurance Brokers' Committee) was formed specifically to look after the interests of Lloyd's brokers, and remains an autonomous body in so far as matters affecting Lloyd's brokers are concerned.

LMBC is committed to developing initiatives and supporting all moves which raise standards and enhance value and quality of service, thus improving broker competitiveness in bringing business not only to London but also to other world insurance and reinsurance markets, where the interest of clients are most effectively served. LMBC is the brokers' champion of LMP reforms and benchmarking.

British Insurance Brokers Association

BIBA is the UK's leading general insurance organisation. It represents the interests of insurance brokers, intermediaries and customers, and has partner members from the leading companies in the insurance industry.

BIBA's relationship to the LMBC is described above. BIBA is the nationwide voice of the insurance broking industry - advising members, regulators, consumer bodies and other stakeholders on key insurance issues. In addition, BIBA provides training, schemes and facilities, technical advice, guidance on regulation and business support, and helps to raise - and maintain - industry standards.

Institute of Insurance Brokers

The Institute (IIB) was formed in 1987 as a professional association for over 1,000 insurance broking firms throughout the UK and represents their interests to HM Government, the Financial Services Authority, the EEA Commission and Parliament and all other relevant bodies throughout the World.

Table 2 shows other associations and groups of which we are aware which were not separately informed of the consultation by the Treasury (as noted above, all members of Lloyd's received individual notification of the consultation from the Chairman of Lloyd's giving full details as to how they might obtain a copy of the consultation paper).
Table 2. Name   Aims and Functions
United Names Organisation
A Names action group comprising 50 Names who commenced underwriting at Lloyd's between 1973 and 1990, and who did not accept the Reconstruction and Renewal settlement of 1996. Over 98% of Names agreed to Reconstruction and Renewal in 1996 but a small number of Names have continued to bring claims which have been rejected by the courts -most recently in the High Court decision of Mr Justice David Steele in Heather Mary Adams -v- The Society of Lloyd's [2008] EWHC 1433(Comm))
Europe Names Association

A Names action group which has submitted a number of complaints to the European Commission and Petitions to the European Parliament alleging that the UK Government has failed correctly to transpose Directive 73/239 EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance, and that had they done so fewer Lloyd's names would have been ruined. It appears that it is no longer active.
The 1173 Action GroupA Names action group formed in mid-2006 comprising certain Names who participated on Lloyd's syndicate 1173 for any of the underwriting years of account 1998, 1999, 2000, and 2001 to investigate the affairs of the syndicate and obtain compensation for losses arising out of the alleged negligence of the syndicate's former managing agent, Cottrell & Maguire Limited
American Names Association

The American Names Association was originally formed to protect the interests of its members, American Names. It now describes its function as:

"In addition to its original mandate, the ANA now serves as a source of unique analysis and information for US companies, insurers, legislators, regulators and reporters wanting to better understand the history of the Lloyd's insurance market and how it operates today."

It appears that this group is also no longer active.

The European Federation of Insurance Intermediaries ("BIPAR")

BIPAR represents the public affairs interests of insurance intermediaries with European institutions. Its members are 47 national associations of insurance agents and brokers in 32 countries. The 2 UK member associations are the British Insurance Brokers Association (BIBA) and the Association of Independent Financial Advisors.

As noted, BIBA was informed of the consultation.

Association of British InsurersThe ABI (Association of British Insurers) represents the collective interests of the UK's insurance industry. The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry.

The Association has around 400 companies in membership. Between them, they provide 94% of domestic insurance services sold in the UK. ABI member companies account for almost 20 per cent of investments in the London stock market.

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