ANGRY Lloyd's of London Names last night launched a high risk legal challenge to the insurance markets recovery plan to win extra concessions for those who met underwriting commitments.

Lloyd's dismissed the last minute move as not having "the remotest" chance of success. But it signalled a tense few weeks for Lloyd's, which must implement the recovery plan this summer to pass regulators' solvency tests.

The intervention coincided with the despatch to 34,000 Names worldwide of nearly 48 tonnes of paperwork setting out the final details of a £3.2 billion sterling out of court settlement offer.

Names in Tennessee are being excluded because of US legal obstacles but otherwise Lloyd's has widespread support for the plan from Names, the individuals whose assets have traditionally supported underwriting. Yesterday it strengthened its hand further by winning a Court of Appeal ruling in London that damages won by Names in court should be used to repay Lloyd's debts before third parties.

But the decision by the Paying Names' Action Group to seek judicial review of the plan raises the possibility of the market's future again being thrown into doubt. Mr Tony Welford, the action group's chairman, said the objective was "to bring them (Lloyd's) to the negotiating table". The application would be withdrawn if his members were given extra help. But the group's lawyers acknowledged there was "a risk" of the action wrecking the recovery package.

Mr John Abramson, of Warner Cranston, a legal firm, said an application for judicial review would be made "at the earliest opportunity" - probably today.

The application follows the breakdown of negotiations with Mr David Rowland, Lloyd's chairman. The 3,000 Paying Names argue that the insurance market has acted unfairly and beyond its statutory powers. They want extra help for those who continued underwriting, despite heavy losses.

The group's members say they are unfairly disadvantaged compared with Names who refused to pay bills and are having debts written off.