Lloyd's worst 51 performing active underwriters have been told their trading rights could be axed.
Out of those warned, 27 have either stopped or will cease to be active underwriters at Lloyd's by the end of 2001.
Historically, syndicates' performances have been ranked according to capital loading exercises. But in January, Lloyd's chief regulator David Gittings announced a crackdown on the poorer performers.
Gittings spelt out "seven deadly sins" that would spark regulatory action. These included inadequate independent reviews, reinsurance recoveries, aggregate monitoring and credit controls.
Now those responsible for writing risks for performers in the bottom quartile are being held personally responsible. The worst syndicates have been identified according to Lloyd's 1998 results and predictions for 1999.
A Lloyd's spokeswoman said: "We approached 51 underperformers and, in 17 cases, Lloyd's started looking at particular syndicates and underwriters. In the remaining 34 instances, the managing agents themselves took action without us prompting them and said they were unhappy with the situation."
Only four will remain active underwriters for the year 2002 account.
Gittings said: "We are taking things seriously, as what we are looking for is making profits. Those that make losses are no longer acceptable." He added the move was part of a campaign to drive up standards but was also intended to make London a more attractive place for insurers to do business.
"We need to protect our licences around the world and maintain
the ratings of the market," he said. "We want to keep regulators satisfied that we are not heading for another reconstruction and re-newal. This is also to do with financial security of the market and ensuring it is able to pay claims."
James Gerry, director of underwriting at XL Brockbank, welcomed the continuing review. "One of the things we have struggled with in a syndicate market place is that over time we have been dragged back to the lowest common denominator," he said. "Time and time again we see underwriters sinking deep in the mud, almost to their necks, before they recognise the problem.
"I am not sure if they are typically optimistic or if it is just ignorance. But if they do not capture the information that will change the performance of the account, then that is just not acceptable."
Gerry added some underwriters' poor performances could be attributed to "greed and plain stupidity", but he emphasised the new measures would encourage others to "pull up their socks".
He said: "A lot of underwriters are prima donnas and we could only slap wrists before. But when people fear for their careers, then we get some responses. Emotive issues like livelihood tends to focus their minds."
