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Lloyd's: Law and Practice




15.1 Traditionally, it was said that the Committee of Lloyd’s “did not interfere in market matters” by determining what types of business members could or could not write or the way in which they carried on their business. That attitude persisted until the late 1980s, even after the Fisher Report and the 1982 Act had given Lloyd’s comprehensive powers of self-regulation. There were always exceptions to this, often in response to scandals or crises.1 The exclusive use of the standard form S, G and SG policies was made compulsory in 1779, to prevent underwriters from waiving the warranty of seaworthiness at the commencement of the voyage. Lloyd’s Deposits were introduced gradually between 1865 for marine business and, after the Burnand affair,2 comprehensively by 1918. A compulsory “Audit”, i.e. solvency test, and premiums trust funds were introduced in 1909. Premium income limits, calculated in part by reference to the size of a member’s deposits and with different limits for different classes of business, were imposed by the Committee from the end of the First World War onwards.3 After the Harrison affair4 the writing of direct financial guarantee business at Lloyd’s was prohibited by market agreement. A resolution of a general meeting in 1898 adopted the FC&S clause, excluding war risks from marine policies unless expressly reinstated;5 and by market agreement in 1936, at the instigation of the Committee of Lloyd’s, land war risks were excluded from property insurance.6 Non-marine and aviation “tonner” policies were prohibited by the Committee in 1981.7 Ad hoc guidance or pressure from the Chairman or a Deputy Chairman sometimes resolved disputes or mitigated the effects of injudicious behaviour by underwriters or brokers.

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