Lloyd's (Hansard, 12 June 1997)

§ Mrs. Roche

[holding answer 11 June 1997]: I have given careful consideration to the question of an enquiry into the past problems of Lloyd's of London ("Lloyd's").

I recognise the hardship suffered by many underwriting members of Lloyd's ("Names") as a result of the losses at Lloyd's in the late 1980s and early 1990s, despite suggestions that for the most part, the losses can be attributed to a series of natural and man-made disasters. Moreover, a number of adverse rulings in the courts in the United States extended the scope of policies underwritten at Lloyd's to cover certain asbestosis and pollution risks which were never envisaged when the policies were written. The position was worsened by the so-called "LMX" spiral, where syndicates and reinsurance companies in the London Market repeatedly reinsured one another at a time of poor market conditions. The various losses have been thoroughly investigated in some 27 independent reviews. Under the circumstances, it seems unlikely that further investigations will identify any information beyond that which is already known.

Some Names have suggested that they were the victims of fraud. None of the independent loss reviews, or the investigations carried out by my Department and the Serious Fraud Office, has uncovered any evidence sufficient to justify the institution of proceedings. Although people have claimed to have such evidence, they have consistently refused to make it available to my Department for examination. Of course, if anyone provides any new evidence to me, I shall consider it very carefully and act accordingly.

There are a number of other practical considerations which I have taken into account.

As the Companies Acts are not relevant to the Society of Lloyd's, the only powers available to instigate an investigation are powers under the Tribunals of Enquiry (Evidence) Act 1921. This is an extremely costly procedure which cannot be justified on the basis of the hearsay evidence available to me and when previous investigations, conducted much nearer the time, failed to produce any proper evidence. I also note that, given the complexity of the Lloyd's market, it could take many years to complete the process. The alternative would be an administrative enquiry which would have no powers to 525W require the production of evidence and would therefore have to rely on the goodwill of the people against whom the allegations have been made.

With regard to improved regulatory standards for the future, I note there have been substantial changes to the regulatory arrangements since the events in question. The Government will be considering further the future regulatory arrangements for Lloyd's but I am afraid I do not believe that a further enquiry into past events will materially help that consideration.

Under the circumstances, I do not, therefore, propose to establish a public enquiry.