Lloyd’s Chairman Lord Levene is continuing to act as a convincing frontman for the market, raising big issues wherever he goes. Last week it was Los Angeles and the issue was the need for urgent action to tackle the “compensation culture”.

He told a civic meeting that a new survey of local business leaders showed that 95% agree the cost of compensation is a drain on the economy. The same number said they were concerned about the potential impact of liability costs on their own business or industry.

Lord Levene said that current US tort costs are equivalent to 5% tax on wages. “At this rate of increase, by 2005 tort costs could equal $1000 per citizen per year.”

He also criticised US legislation that requires Lloyd’s to hold collateral to cover 100% of gross liabilities in the US trust funds. “When we do reinsurance business here, we are classified as ‘alien reinsurers’,” he said. “In practice this means that Lloyd’s currently has about $9 billion tied up in such funds in the US, when we actually pay US claims out of funds held in the UK.

“All this despite the fact that we are fully and rigorously regulated back in the UK, where the regulatory system ensures that we hold assets adequate to cover to our entire liabilities worldwide. The US and the UK have a common bond to see our intertwined economies do better. But barriers to trade, such as those that affect the insurance industry, and actions that drain the economy, such as excessive litigation, hold back growth and progress.”