Lloyd's of London insurance market has reassured its investors and pleased rating agencies this week by insuring its central claims-paying fund for up to £500 million sterling (€753 million) over the next five years.

The deal means that Lloyd's investors, both corporations and individuals, are less likely to have to pay extra money to Lloyd's for excessive losses suffered by the market as a whole - as they did in the late 1980s and early 1990s when Lloyd's had to meet claims worth about £12 billion.

The insurance policy, underwritten by six global insurers and re-insurers outside the Lloyd's market, provides £350 million of cover each year if Lloyd's central fund has to pay out more than £100 million, with an aggregate limit of £500 million over the whole five years. Lloyd's chairman Mr Max Taylor said the organisation now had access to mutualised resources standing behind all its policies in excess of £800 million. He said the extra coverage was not arranged in expectation of large losses, but said that the insurance market as a whole was facing a difficult period.