Lloyd’s Chairman John Nelson has told brokers that oversight is his top priority, given the current tough market.

He told the annual dinner of the Lloyd’s and International Insurance Brokers Association in London that market conditions are likely to remain difficult for underwriters.

Investment returns won’t improve for some time, he says, noting the supply of capital has remained strong. This may mean “the insurance cycle may take more time to turn than historically”, which will make oversight important.

Mr Nelson and Lloyd’s CEO Richard Ward last week wrote to managing agent CEOs blaming the difficult times for Lloyd’s plans to reduce spending by £17 million ($27 million) next year and warning the corporation may cut 60 jobs.

They said high claims and continued pressure on rates and low investment returns have put the market under strain. Despite this, Lloyd’s will drop its performance and risk management levy, which would save the market £14 million ($22 million), and freeze the market service charges paid by the managing agents at 2011 levels.

Mr Nelson says the Lloyd’s market’s competitiveness is also a priority and he will be a keen promoter of market modernisation.

“Frankly, as a market, we are behind other industries on the process of modernisation,” he said. “We must keep up momentum or this will begin to have a negative impact on our business.”

He says large brokers have been able to invest in global distribution in a way that the Lloyd’s market could not have done on its own. He wants to see Lloyd’s working more closely with larger brokers and the increasingly global smaller and medium-sized specialist brokers to exploit their distribution networks.