Cold cure for Lloyd's
COMPLACENCY is the besetting sin of Lloyd's of London, and fright the best tonic. I just hope that Lloyd's is now fright- ened enough to get down to the business of change before this year's news of a billion- pound loss recedes into memory — but let me give reform a helping nudge. The loss will fall with dreadful force upon those least able to bear it. That follows, as a mathematical certainty, from the report on Lloyd's by David Rowland and his futurolo- gists. Richer members of Lloyd's may have larger commitments, but their risk will be more widely spread, across dozens of underwriting syndicates. Humbler members bunch their risks — typically over ten syndi- cates, sometimes over three. If one of those syndicates catches a bad cold, they will catch their death. Mr Rowland wants to put them into pooled funds with a wide spread of risk. When this idea was first floated, the professionals were complacently bored, and some members apprehensive. They feared that the best risks would he creamed off before the leavings went to the funds. The missing ingredient in this is fund manage- ment. I would ask M & G or Save & Pros- per to run a pooled fund. Their reputations would be on the line, their system would be at the ready, their marketing skills some- thing new to Lloyd's, their customer base on tap. They would also bring to Lloyd's a business discipline it needs, for they would be the nearest thing it had to an institution- al shareholder.
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