Conscious that the sight of a Lloyd's name, or investor, being forced into bankruptcy is hardly the best publicity, last year the Council of Lloyd's decided to postpone any legal action against Lloyd's names who were unable to meet their underwriting obligations.

A new review committee will examine the cases of Lloyd's members who are willing but unable to settle their debts.Mary Archer, the first woman to be elected an external member of the Council of Lloyd's, has been asked to chair the new committee that will review hardship cases.

"It's a difficult assignment," observed Derek Wills, chairman of Lloyd's Underwriters' Association.

Many Lloyd's names are now facing hefty underwriting losses arising from asbestosis and environmental pollution claims in the United States, for instance. Last Friday, more than 800 members of one of the syndicates managed by RHM Outhwaite Underwriting Agency Ltd. served writs on members' agents who introduced them to the troubled group in an attempt to recover some $425 million.

In what represents the biggest single action brought by members of Lloyd's, claimants are alleging negligence in writing reinsurance business by Outhwaite. The affair has focused attention once more on Lloyd's unlimited liability requirement. "It's an issue that isn't going to go away," Ms. Archer admitted. But she believes there are strong arguments in favor of retaining the present unlimited liability rule.

"That's what makes Lloyd's unique," Ms. Archer said in a recent interview. "Lloyd's PLC just would not work."

Nevertheless, a number of ideas are being floated in an effort to provide Lloyd's members some degree of protection, such as the "mutualization,' ' or sharing, of losses above an agreed maximum by the entire market.

Lloyd's minimum wealth requirements also are being raised from 100,000 ($170,000) of readily realizable assets to 250,000 ($425,000).

The hardship committee is currently reviewing about 60 cases, a number of them from the Outhwaite syndicate.

To put the issue into perspective, the committee's case load represents only 0.2 percent of Lloyd's membership.

Nevertheless, the whole question of how to treat those members who are financially unable to meet their commitments is one that will need some delicate handling, a Lloyd's spokesman said.

While Lloyd's insists it would never force a name to sell absolutely everything, including "reasonable" living accommodation, "we would not want anyone to think we don't take unlimited liability very seriously," the spokesman stressed.

Lloyd's Chairman Murray Lawrence commented recently on the fact that the

average wealth of members is considerably less now than it was some 30 or 40 years ago, a situation that has contributed to the increase in the number of hardship cases.

Ms. Archer has been a Lloyd's name since 1978 but decided she wanted to take a more active part in the running of the world's most famous insurance market after reading so much in the press about the seemingly endless problems and scandals that plagued Lloyd's throughout the 1980s.

Having taught chemistry at Cambridge University for 10 years, Ms. Archer took an extended leave of absence from the academic world to stand for election as an external member of the Council of Lloyd's.

"I felt I had no experience outside the university to call on and was intrigued by management," she explained.

Ms. Archer just failed to win enough votes when she first stood as a candidate in 1987, but successfully broke into what is still an overwhelmingly male organization a year later. She said she has no plans to return to teaching.

Despite the well-documented problems that Lloyd's has encountered in recent years, Ms. Archer has every confidence in the market's future.

She sees big opportunities for Lloyd's in Europe as a single insurance market gradually develops, but emphasized the need to make absolutely certain that new business is not gained at the expense of Lloyd's U.S. connections.

Lloyd's is therefore keeping a close watch on directives issued by the European Commission in Brussels to ensure that no barriers are erected around the European Community insurance market that could threaten Lloyd's position in the United States.

The Council of Lloyd's is responsible for regulating the market and plotting future strategy. It consists of 28 members. Twelve are names who work in the market, eight are nominated and must be approved by the governor of the Bank of England and eight are external members who are elected. The only woman council member before Ms. Archer was Elizabeth Freeman, a nominated member who resigned a couple of years ago.

Although Lloyd's still has "an overpoweringly male image," Ms. Archer pointed out that women now account for about a quarter of the names while many more work for the underwriting syndicates. She believes the old-boy network that has sustained Lloyd's for the past three centuries is gradually disappearing.

Ms. Archer, who is married to Jeffrey Archer, the novelist and former Conservative Party vice chairman, is a director of Anglia Television and chairman of the National Energy Foundation, a new organization set up to promote the innovative and efficient use and provision of energy. Ms. Archer is considered to be a world expert on solar energy.