“Lloyd’s of London, anxious about its dwindling share of the global insurance market, proposed to simplify its structure and accounting methods in an attempt to attract more capital,” writes James Hagerty in today’s Wall Street Journal.

“The changes, subject to a vote by members later this year, would end the practice of allowing individuals, known as “names,” to invest money in the market on an unlimited-liability basis, requiring them to give up their entire wealth if needed to pay claims. The market also would adopt modern corporate practices for reporting results, rather than wrapping up its books more than two years after the end of each accounting period.”

“Details of the changes remain to be worked out, setting the scene for a struggle between big corporate insurers that sell insurance through Lloyd’s and the names, wealthy and often aristocratic people. Some names fear the proposals are a means to squeeze them out of the market. A spokesman for the Association of Lloyd’s Members, which represents names, predicted that they would block some of the proposed changes.”

“Though Lloyd’s has suffered huge losses in recent years, most recently from the Sept. 11 attacks, it remains one of the world’s largest insurers with a strong brand and licenses to operate in 64 countries. Its profit outlook is improving as insurance prices soar.”

“Lloyd’s isn’t a company, but rather a market, where 86 syndicates (in effect, small insurance companies) gather under one roof to offer insurance to such customers as airlines, property owners and shipping lines. The market traces its history back more than 300 years to a coffee shop near the Tower of London where people began selling insurance to cover the risks of ocean shipping.”

“The number of names providing capital to the market has dropped to about 2,500 from a peak of 34,000 a decade ago, largely because of huge losses on asbestos litigation and natural disasters. Now, individuals put up only about 20% of the market’s capital; the rest comes from corporations, including giants like American International Group.”