London insurance insiders yesterday admitted that the City lagged far behind Bermuda in its bid to carve out a slice of the lucrative insurance-linked securities business.

Draft UK regulations on ILS were issued last month, and the Prudential Regulation Authority, the UK’s insurance regulator, released details of its proposed approval process, which, after it approves the company issuing the securities, wants ten days to approve each new vehicle.

Katherine Coates, a partner in London law firm Clifford Chance, told the Financial Times: “It is not as fast as Bermuda. Bermuda allows post-transaction notification.

“If the London market could get that it would be fantastic.

“We want to demonstrate that we have a rigorous regulatory system, but need flexibility to get the market up and running.”

Malcolm Newman, of industry association the London Market Group, added: “You can’t tell a client in this market that a deal is subject to regulatory approval. Some clients would go to other jurisdictions.”

With London-based insurers already looking at domiciles in the EU, ILS is regarded as a way to ensure that the city remains a major hub for the industry.

Michael Wade, a senior adviser to the Cabinet Office, told the FT: “What London did not have was the legal structure for ILS vehicles nor, then, for the tax and regulatory framework to domicile vehicles in the UK.

“It is so important for London to re-establish its lead position in this area of risk transfer. ILS is a game-changer if we can get it right.”

Greg Wojciechowski, CEO of the Bermuda Stock Exchange, said Bermuda, which has 162 listed ILS issues with a market capitalisation of nearly $20 billion, remained vigilant over potential competition to its market and continued to work to grow its share.

He said: “This is a very interesting asset class to the capital markets. The interest continues to develop, so it’s not surprising that jurisdictions that have experience in insurance and financial services would be looking at this space.

“Anybody that has a prominent position in the industry in which they deal must always be cognisant to any threats, potential or otherwise, and any opportunities.

“In order to be able to continue to develop your industry and your platform, you have to aware of these things.”

Mr Wojciechowski added: “What Bermuda has and, over its many decades of being involved in the insurance and reinsurance industry, is that it has worked very closely with the industry, the service providers in Bermuda and the regulators to create a fit-for-purpose commercial platform including the regulatory framework which meets international standards and the requirements of our international clientele.”

“In the Financial Times article, people are pointing to our ability to get things to the market quickly.

“It’s here, it’s tested, we have doing this for nearly a decade and we’ve done it based on a very measured and commercial approach, which not only provides the necessary regulatory oversight, but takes into account the commercial needs of our international clients.”

And Mr Wojciechowski said: “Competition is competition — the market has to decide — if someone creates a better product the market values, that’s more important to them, the business will go there, but the market globally doesn’t like uncertainty and what Bermuda does offer is complete certainty.”