Besieged Lloyd's of London tries to ensure its reputation
London — Lloyd's of London, it is said, will insure almost anything.
Among the risks it has accepted: the Mona Lisa being damaged en route to Japan; golf clubs insuring against holes in one; mishaps to the legs of Marlene Dietrich and soccer star Pele; a company offering $: 1 million ($1.6 million) to anyone catching the Loch Ness monster - though a Lloyd's broker solemnly ruled out the use of depth charges before writing the policy.
Now, however, the famous insurance market in its marble underwriting hall on Lime Street in the City of London faces an even larger risk - and is fighting hard to ensure that it can not only be met, but also averted.
The risk centers on one of the worst sets of crises in Lloyd's 300-year history. There are allegations that a widening network of fraudulent dealing has siphoned off more than $: 55 million ($88 million) for the private gain of individual members.
In the glare of almost unprecedented publicity, Lloyd's has suspended the single most successful marine underwriter in its market, Ian (''Goldfinger'') Posgate, and has stopped another marine syndicate from writing business. A broker is suing five prominent former employees for damages and breach of duty. Another broker has fired five directors. Mr. Posgate is claiming wrongful suspension in a civil court suit.
The concern here now is that daily unflattering headlines on both sides of the Atlantic might well cause a loss of confidence in Lloyd's professionalism and integrity.
This could result in lucrative insurance business moving away from the single biggest insurance market in the world - 266 firms of Lloyd's brokers who place about $4 billion worth of premiums each year through 431 syndicates.
Not only could this cost the British government millions of pounds in so-called ''invisible'' earnings, but also unless they are checked, these crises could conceivably taint the entire City itself, which remains the world's largest financial center.
Prime Minister Margaret Thatcher herself has expressed concern and urged that something be done.
Lloyd's reputation is also under fire in the United States, where it generates half of its premium earnings. Already, Al Lewis, the New York State superintendent of insurance, has called Lloyd's a ''pirate's cove.''
Illinois State investigator Bill Allen claims Lloyd's has not cooperated in a probe of the Kenilworth Company of Chicago, which had attracted $: 25 million ($ 40 million) of reinsurance from Lloyd's before going bankrupt.
Lloyd's rejects the charges, saying that in fact it told US federal and state officials about dangers at Kenilworth last February. Still, Lloyd's needs to keep its goodwill and reputation in the US in order to retain the licenses it holds and needs in almost every state.
Mr. Lewis told the Economist weekly that ''if we get burnt, who knows [about Lloyd's license in New York]?''
Here at home, with the Thatcher government, all sides of the House of Commons , and the Bank of England seriously worried, the government Department of Trade and the City of London police are investigating.
As a result, The Christian Science Monitor has been told by sources close to the governing committee of Lloyd's that an outside manager will be brought in next year to strengthen and help supervise the 1,750 people on the secretariat, or permanent staff.
He may not be so powerful a figure as the governor of the Bank of England, Gordon Richardson, has wanted. But Lloyd's clearly sees the need to make some changes.
''Lloyd's has generally been held to represent the best in British commercial endeavor . . . international, soundly based, and innovative,'' wrote the conservative Daily Telegraph Dec. 10. But, ''dubious practice [has] gained respectability by repetition. . . .''
Mr. Richardson is the virtual guardian of the City of London itself and is an immensely authoritative figure.
He wants a powerful new chief executive to police self-regulation. So do some members of Parliament. Outside investigations of the Lloyd's structure first suggested the move as long ago as 1969, in a package of reforms opposed by a number of brokers.
Lloyd's critics claim the market should have acted much sooner.
The new appointee will probably not be called a ''chief executive,'' since Lloyd's already has a secretary-general. But he will give needed continuity, because members of the ruling council will serve fixed terms.
The crises have come at a particularly difficult moment for Lloyd's. The act of Parliament under which it has been operating, passed in 1871, does not even mention Lloyd's as a corporate entity and gives it almost no disciplinary powers.
A new act passed earlier this year contains needed reforms, but it does not come into force until January. Until it does so, Lloyd's has been hamstrung.
Brokers say Lloyd's will be greatly helped by the new act, which in part gives its ruling council powers to suspend and investigate errant members with immunity from subsequent lawsuits. Members may make use of an appeal tribunal.
In its own defense, Lloyd's says that no one insured by a Lloyd's underwriter is in danger of losing his cover. According to Peter Miller, chairman of the Miller group of brokers, ''Never in 300 years has Lloyd's ever failed to pay any valid claim, and I see nothing in present circumstances to alter that.''
Brokers agree that the Lloyd's reputation - and to a degree, the City of London's reputation - for effective self-regulation is under severe scrutiny, nonetheless.