Lloyd’s Chairman Sax Riley is pushing ahead with his reform program, despite the threat of a revolt by thousands of Names who have the power to force compromises. One development that may give him pause for thought is the political repercussions of a campaign being quietly fought by a mere 200 or so former Names who lost their shirts in the market about 15 years ago.

Although the disgruntled Names have run out of options in British courts – all their actions have been rejected – the European Community’s legal system is proving more supportive.

The European Commission began proceedings against the British Government late last year, deciding the Government has questions to answer about whether it regulated Lloyd’s properly in the late 1980s and ensured it remained solvent. At that time the market lost billions of pounds in claims over asbestos, the Piper Alpha oil platform disaster and a spate of hurricanes.

A report by European Parliament MP Roy Perry says that a 1973 European insurance directive charged all EU national regulators with ensuring insurers and markets are solvent at all times. “That there was failure to observe EU directives up to 1982 and failure to correctly apply them after 1982 is a matter of fact.”

The report, which will be discussed by an influential EC committee in Brussels later this week, also criticised the EC itself over the way it dealt with the matter at the time. “This whole saga has been characterised by secrecy and delay,” the Perry report said.