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Insurance Market

Volume 281: debated on Wednesday 17 July 1996

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To ask the President of the Board of Trade when he last met the council of Lloyd's to discuss the operation of the insurance market. [36081]

I last met the chairman of Lloyd's on 2 July.

In his conversations with Lloyd's, has the Minister taken the opportunity to discuss its concerns about its inability to cover some of the effects of global warming, particularly storm and flood damage in the American east? Will he discuss those matters with the Secretary of State for the Environment, who is busy telling us that he is saving the world's ecology while Britain's great insurance centre seems to expect that it will be unable to cover a recurrence of the disasters in 1987 to 1992 that caused some of the problems that it is busy trying to unravel?

Lloyd's has a well-deserved reputation for specialist cover provision, and its international business has always been innovative and usually well able to cope with unusual demands. That is not to say that every specific cover policy is necessarily commercial or that it must be able to cover every incident that arises. Those are matters for Lloyd's. I will be happy to take them up when I next meet the chairman, but they are essentially for the commercial judgment of Lloyd's, which has, by and large, a pre-eminent reputation in providing such cover internationally.

Fifty-one Lloyd's names were Members of Parliament. One was a Labour Member and 50 were Tory. The one Labour Member got out and did not lose a penny. The 50 Tories who stayed in lost their shirts. What does that tell us about who best knows the City and who can best run the country? I thank the hon. Gentleman for that sedentary intervention. The cheque is in the post.

The Minister has referred to the deserved reputation of Lloyd's, but was it not obscene that £88,000 million was lost between 1988 and 1992, which caused many a name severe hardship? Is it not right, however, that the Equitas plan proposed by Lloyd's should be given fair wind and support, and that, on the back of its success, we should have proper independent regulation of Lloyd's so that the obscene losses of the past cannot be repeated? In that context, and in the context of friendship and amity, if the Government wish to introduce an independent regulatory framework between now and the general election, the Opposition would give it a sympathetic examination.

I am sure that the hon. Gentleman will join me in welcoming the fact that Lloyd's has recently announced a return to significant profits. That will benefit people who continued as names. Their judgment in so doing is, in many cases, to be commended. They will benefit from that revival in fortunes which, sadly, the hon. Gentleman will not, so it is open to question whose was the better judgment.

This is an important point. I appreciate what the hon. Gentleman says. It is in the interests of policyholders worldwide, of our capital markets' security and of the confidence not just of people who put up risk capital in insurance markets, but of other financial markets, that the reconstruction and renewal programme goes through. Like the hon. Gentleman, I am delighted that, this week, some 95 per cent. of names appear to have supported it. Although my interest in the matter is principally towards policyholders rather than the names, it is undoubtedly good news that Lloyd's appears to be on the right track. I hope that we, like Lloyd's, can look forward to a healthy future.