Unless changes are made quickly, the very future of the market is in doubt

Tony Markel, US insurer

Mr Riley's move follows a review launched last year, and growing concerns over the future of the market, which is attracting a declining share of global insurance trade as business switches to rival markets in countries such as Bermuda.

Representatives for Lloyd's 2,490 Names, who pledge their fortunes to underwrite losses in return for income, estimate the market has lost �6.5bn and �8bn over the last three years.

And Tony Markel of US insurer Markel, which invests in Lloyds, told the Financial Times that Lloyd's needs "fundamental, gut-wrenching change to survive".

"Unless changes are made quickly, the very future of the market is in doubt," he said.

Names flee

Mr Riley's proposals involve a power switch reflecting the decline in the number of Lloyd's Names and growth in corporate backers.

While the market a decade ago boasted 34,000 individual backers, Names fled after losing millions of pounds when the market was hit by a wave of claims, many related to asbestos, in the late 1980s and early 1990s.

The market made losses of about �8bn in the five underwriting years between 1988 and 1992.

Corporate investors now make up 80% of Lloyds �12.3bn ($17.6bn) underwriting capacity, but, thanks to an archaic election system, have only 900 of 12,000 votes, the FT said.

'Pay up'

Names, however, are reportedly furious with the changes.

If power was to be diverted to companies "they should pay for that privilege", Christopher Stockwell of the Lloyd's Names Association told BBC Radio 4's Today programme.

While the changes will have to pass a vote before being enacted, Mr Riley said he was confident of winning approval.

"We wouldn't be going before the council with a packet of measures unless we felt there was a reasonable chance that we would agree something," he told the FT.

Modernisation plan

His proposals are thought also likely to focus on changing Lloyd's antiquated three-year accounting reporting system to make it easier for corporate investors to compare their Lloyd's operations with other corporate activities.

Under the present rules, Lloyd's syndicates must offer capital to the market every year but report their financial results three years in arrears.

The practice dates back to the market's 17th century origins in insuring long sea voyages which often took three years.

Corporate investors would prefer to offer capital to the market continually, rather than once a year, analysts say.

It is likely to be several more months before any proposals are put to a vote of Lloyd's members.

Lloyds' chief executive Nick Prettejohn said: "What this will be is the council saying, yes, there is enough in this that you should go out and work more detail.

"Maybe the proposals will change shape a bit as a result of that before they reach the glossy document stage."