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London Insurance Market Reform

Volume 461: debated on Thursday 21 June 2007

Following Budget 2006, the Chancellor established a High Level Group to consider issues related to the international competitiveness of the UK financial sector, recognising the opportunities presented by emerging markets and the strength of international competition from other financial centres. As part of this work, the Chancellor asked Lord Levene, Graham Millwater and Andrew Kendrick to review the business processes of the London market. The Treasury too has been working closely with the Financial Services Authority and the wholesale general insurance market to identify market led reform and modernisation that can enable the industry to remain competitive in a global market. The Treasury has also been developing its understanding of the business environment for this sector. The Treasury, Financial Services Authority and wholesale general insurance market will take stock again and assess progress in the autumn.

As part of this wider work on reforms of the London insurance market, Lloyd’s of London has been working with the Treasury to identify areas where its corporate governance arrangements are out of step with modern practices. Following these discussions, the Treasury has decided to develop legislative proposals to modernise the governance arrangement for Lloyd’s. These proposals will take the form of a Legislative Reform Order to amend Lloyd’s Act 1982. The aim of the proposals will be to update the governance arrangements of the market to reduce costs and unnecessary bureaucracy. The Treasury will have extensive consultation with interested parties and intends to publish proposals in the New Year. Any proposals will meet the preconditions and restrictions of the Legislative and Regulatory Reform Act 2006.