In comments made to the UK's Daily Telegraph, Richard Ward, chief executive of Lloyd's, observed that the London market is now not only facing direct competition from other established markets, but also from insurers in Dubai which are increasingly underwriting local risks.

"Local markets are developing. What is clearly happening globally is that a lot of risks are having more tendency to be placed locally, rather than internationally. The challenge is to respond to that and ensure we see risks that would come ultimately back to the market place," he told the paper.

However, Dubai's ambition to become the major financial centre between the European and Asian timezones has also fuelled growth in its local insurance market, Ward added, noting that the rate of growth of markets in the Gulf region has been "quite phenomenal".

To facilitate insurance industry growth, Dubai is in the process of enacting a series of new insurance laws, and in April 2007 the Dubai Financial Services Authority (DFSA) issued a consultation paper which set out a number of proposals covering direct long-term insurance, credit insurance and group supervision.

However, according to Bradley Kading, president of the Association of Bermuda Insurers and Reinsurers, Dubai is not seen as a competitive threat to Bermuda, or any other established insurance centres, and is expected to interact with and compliment these traditional insurance hubs.

Speaking to Bermuda's Royal Gazette, Kading stated: "The future for insurance buyers likely includes the ability to access insurance markets from multiple locations. Historical centres like the US, London and continental Europe will remain influential."

He added: "New centres like Bermuda, Ireland, Dubai and Singapore will become convenient hubs for certain markets. Bermuda's global insurers and reinsurers will operate from multiple locations."