? Modernization of the structure.

Lloyd's existing regulatory and market boards and committees will be replaced by a single "franchise" board. Lloyd's will act as a franchiser in the management of the marketplace, with the managing agents as franchisees.

The idea is to create a board similar to that of a publicly traded insurer, which would have strategic oversight, outside directors, and less representation from vested interests, said Caroline Wagstaff, a Lloyd's representative.

Lloyd's would become an active franchise manager, which would allow it to be involved earlier in the business planning process of individual managing agencies, she said. This would permit early intervention if someone comes up with a business plan that is not going to deliver the returns that the Lloyd's market wants to see, "or is business that isn't core to our franchise," said Ms. Wagstaff.

? A change in the way the market reports its results.

Lloyd's current three-year accounting system will be replaced by conventional GAAP accounting.

? An end to unlimited liability and the annual venture.

No new unlimited liability members, known as "Names," will be accepted starting in January 2003, and existing unlimited liability Names who wish to continue underwriting will convert to limited liability status by January 2005.

Unlimited liability members provided the traditional capital base of the market, but they have seen their numbers drop from 34,000 at the end of the 1980s to 2,490 today.

The annual venture, which is the historic support structure for unlimited liability members, requires a syndicate to start anew every year. In theory, it protects new members from paying for the liabilities of members from previous years. Many corporate-capital members, which now provide the bulk of Lloyd's capacity, have complained that the annual venture is expensive to administer.

? A new vehicle for Names.

A new vehicle will be set up for Names to participate in the market after January 2005, so that Names will be able to support Lloyd's businesses in the market on a limited liability basis. Numerous options for this vehicle are still being considered, said Ms. Wagstaff.

? A transition mechanism will be set up to support this change.

The franchiser will explore avenues for the cash buyout of all unlimited liability, third-party capital. Meanwhile, the proposals stipulate that Names will be able to participate on syndicates in the same way as they do currently until January 2005.

"This is not an argument about Names versus corporate members," said Lloyd's Chairman Sax Riley, in a statement. "Our aims are profitability, modernity and transparency. Investors and policyholders have a choice of where they go, and we want them to be able to compare us easily, and favorably, with our competitors."

These proposals were developed by the Chairman's Strategy Group, which was formed in March 2001. Lloyd's said that informal market consultation will take place over the next few months. The membership of the Society of Lloyd's will vote on the reforms later this year.