Investors in the Lloyd's of London insurance market who lost millions during the market's collapse in the 1990s are suing the UK government for its alleged failure to regulate the market properly.

Some 1,100 investors in the Lloyd’s of London insurance market are launching a class action suit against the British government to reclaim losses totaling over GBP1 billion.

The claim comes years after hundreds of other investors – known in the terminology of the historic market as ‘Names’ – failed in a lawsuit against Lloyd’s itself, which alleged that the exchange’s management deliberately concealed the scale of the market’s losses from them.

Now the select group of Names are challenging the government by asserting that the Treasury failed to regulate Lloyd’s properly. Had the Treasury forced Lloyd’s to follow new EU directives on insurers’ capital reserve adequacy, the losses may have been avoided. The Treasury denies any regulatory failings.

The Treasury has since been replaced as regulator of Lloyd’s by the umbrella financial watchdog, the Financial Services Authority.