More companies will choose Bermuda over London unless the government takes action, Lloyd's chairman Lord Levene has warned.
Levene is understood to have made it clear at a meeting of more than 30 City grandees that unless the government addressed the issue of taxes and regulation, other insurers would choose to re-domicile like Hiscox and Omega.
His comments follow the first meeting of the high-level group on financial services, chaired by Chancellor Gordon Brown.
Levene, who has pledged to examine ways to reform the insurance industry, played down suggestions that London was losing business to oversees' markets.
But, he added, if there was any way the UK's tax regime could be made more benevolent, the market could attract more business.
A senior Lloyd's figure admitted the government was unlikely to reduce corporation tax for "fat cat insurers" alone.
But, he suggested if Brown wanted to get onside with the City, other tax benefits on areas such as catastrophe reserving would be welcomed.
He said this would enable companies to reserve additional profits made in a benign catastrophe season in a tax-free environment.
Meanwhile, Gordon Brown has announced he will launch a review on the insurance industry's tax regime and the relationship between HM Revenues & Customs (HMRC) and businesses.
The review will be led by former chairman of HMRC Sir David Varney.
