THOUSANDS of Lloyd’s names yesterday rejected a £900 million package to compensate them for huge losses and threatened to embroil the world’s leading insurance market in years of litigation. More than 17,000 names are now expected to take their fight to the courts.
For the compensation package to go through, £630 million of the £900 million put up by Lloyd’s in December had to be taken up. But although almost half of the names included in the offer backed the deal, they were outvoted by the big losers, and acceptances fell nearly £300 million short of the threshold.
David Rowland, the Lloyd’s chairman, regretted the outcome and said he was particularly sorry for those names who were not taking legal action. He also issued a warning to those seeking redress through the courts that litigation was an untidy, lengthy and expensive route. “It may yield benefit to some who have chosen it, but I fear that others will be disappointed.”
Mr Rowland said that even defeat in the courts would have no bearing on the future of the market. New corporate names have provided a fresh source of funds. These companies do not have to pledge their entire wealth to meet the market’s losses, as individuals are required to do.
Lloyd’s losses have totalled £5.5 billion over the past three years, largely because of a string of catastrophes including shipping disasters, oil spills and air crashes, and they could rise by another £2 billion in May as claims for pollution and asbestosis mount. Faced with devastating bills and the threat of bankruptcy, the names are intent on suing the members’ agents who advised on which syndicates they should join and the managing agents who looked after the syndicates’ affairs.