SEOUL, South Korea — Broker facilities that offer guaranteed capacity for certain lines of business won't benefit clients, brokers or underwriters in the long-term, a leading Lloyd's of London underwriter said.

“If you look back over time, when an underwriter gives away his pen to a broker, without any limitations whatsoever, it has always — not often, always — ended in tears,” said Stephen J.O. Catlin, chief executive of Hamilton, Bermuda-based Catlin Group Ltd.

Such facilities move underwriting decisions away from insurers, he said Wednesday in referring to facilities such as the one Aon P.L.C. and Berkshire Hathaway Inc. established recently in the London market.

“Every single person who has done this costs the carrier money, costs themselves money; and I find it very hard under those circumstances to find a way of justifying this predicated on 'it's good for the client,'” Mr. Catlin said.

Policyholders are better served by having a market that offers choice with underwriting decisions that are “close to the capital provider,” he said during a session at the International Insurance Society annual seminar in Seoul, South Korea.

“If you create swathes of what I would call innocent, ill-advised capacity in the marketplace, you take away from the Lloyd's marketplace the very vibrancy that's made it work,” he said.

The subscription market offers a value that is not available elsewhere and, over time, all the links in the placement chain add value to the process, he said.

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Geoffrey Bromley, president of international at Aon Benfield in London, said the facilities are good for clients.

“We are in a position now where there's more data available where people can make more informed decisions on, if you like, a tracker-type participation than has historically been the case,” Mr. Bromley said during the panel discussion.

The Aon facility will be part of better solutions for the broker's clients, Mr. Bromley said. It also will produce more business for the London market, he said.

“London's participation in much of my company's business, on the insurance side, is much lower than it has historically been, and I think we are looking for ways and opportunities to best utilize the expertise that exists in London,” Mr. Bromley said.

Initial indications are the facility is bringing more business to London, he said.

To read more news from the 2013 International Insurance Society seminar being held this week in Seoul, South Korea, click here.