CITY AND SUBURBAN
It's question-time at Lloyd's of London - but don't ask Little Bo-Peep
filling to go anywhere and do any- thing, the advertiser in the Daily Telegraph's agony column signed himself simply: RUINED NAME AT LLOYD'S. There is a lot of it about. Lloyd's members are discovering, not just that unlimited personal liability means what it says, but that their last chair- man, Murray Lawrence, meant what he said. You may have thought (he told them) that you had joined a tax avoidance scheme, but, like it or not, you are now in the insurance business. The difference is crucial. In the bad old days when the top rate of income tax was 98 per cent, the Chancellor paid for Lloyd's members' loss- es on insurance (offset against tax) while giving them every chance to make capital profits. Nigel Lawson changed all that. They now pay most or all of the losses themselves, and the bills are mounting up. Lloyd's, which rules off its books three years in arrears, must shudder when it sees its competitors' results. Of our five big gen- eral insurance companies, one broke even last year, and four returned losses which ran into nine figures. At Lloyd's, the shock of loss has set off a chain-reaction of law- suits, with members, agents, underwriters, re-insurers and the Corporation of Lloyd's all taking each other to court. That process simply redistributes the losses within the market, and adds the lawyers' fees. It does nothing to tackle the question that matters, which is how to turn Lloyd's back into a profitable business. One approach to the losses is Little Bo-Peep's; leave them alone and they'll come home. Insurance, the Bo- Peepists say, goes in cycles, losses drive weak competitors out, margins then recov- er, and already Lloyd's is doing business this year on better terms than last year.