City snubs Lloyd's cash plea

Lloyd's of London is struggling to raise money in the City to back one of its key strategies to revive the historic insurance market after the devastating effect of 11 September.

Lloyd's wants to raise about £60m to put far more of its business onto the internet, in order to lure more customers from around the world and to make the organisation more competitive compared with insurance giants such as Swiss Re and AIG and the rival market in Bermuda.

But many members of Lloyd's are against the plan and have refused to fund it, forcing Lloyd's to approach other institutions in the City.

One company, which is a member of Lloyd's, said: "They are having a tough time and I am not aware that they have raised any money yet."

The project is called Blue Mountain and is being kept under wraps until Lloyd's raises the money. Lloyd's aims to set up an electronic platform which would allow underwriters to do a lot of work to policy documents online, making the process quicker and allowing people in other countries to participate in the Lloyd's market more easily.

But critics believe the cost of the project is far too high, especially in a year when individuals and companies involved in Lloyd's have had to pay out their largest ever claim from the US terrorist attacks.

One person close to the situation said: "It is obscene to be spending that much on a dot.com project now. The feeling is that this is Lloyd's chief executive Nick Prettejohn's pet project and that there is no clear strategy on it."

Some syndicates are also unhappy with the plan because Lloyd's has said it expects the benefit to be felt in the years to come. But the Lloyd's market is disbanded and re-formed annually, so those providing capital now might not be involved when the internet project becomes profitable.

Lloyd's said it did not need as much as £60m and insisted that it was confident it would be able to raise funds in the City.

Lloyd's already has a website which details its syndicates and what type of cover they offer. It plans to make its internet presence more interactive, so it can cut out much of the work which is still done on paper.

However, it has had to shelve a plan to enable customers to buy insurance directly online after outrage from its specialist broker community, who felt they were being sidelined.