An article yesterday in The Economist, one of the UK?s most influential business magazines, questioned whether Bermuda would be able to accommodate another influx of new insurance companies after another serious natural disaster or terrorist incident such as the September 11 attacks.

According to the less than flattering article Bermuda?s physical size of 21 square miles is ?too small to handle another post-disaster wave of insurers?.

It follows similar sentiments expressed recently by president and chief executive officer of XL Capital Ltd. Brian O?Hara and chairman of the Association of Bermuda International Companies David Ezekiel.

The article said Hamilton is now ?packed? with new office buildings, specifically referencing the ACE and XL Capital offices, and makes the point that prices for office space are expensive, stating that ?top properties go for up to $70 a square foot, a quarter more than the average in midtown Manhattan.?

The article also implies that the booming international business sector is impacting local businesses to the point of forcing the latter to relocate from the city, stating that ?Local companies, priced out of the market, are starting to decamp to cheaper spots, such as the island?s old American and British military bases.?

And the article also mentions the impact of what it characterises as ?the influx of expatriates with whopping expense accounts? on housing and rents in the local market, which it says is driving locals out of Hamilton and making some beachfront property unaffordable?.

The piece lists these and other infrastructure issues that have been well-documented and discussed within Bermuda for years ? such as problems with traffic, and waiting lists for private schools ? and surmises that ?Bermuda is becoming a difficult place to live, not only for locals but also for foreigners.?

Bermuda-based companies trying to attract highly-skilled employees from overseas when they cannot fill posts here may be disturbed that the article says foreigners are already regarding the Island as a ?short-term proposition?.

And, in a nod to the work permit term limit policies that caused controversy when they were introduced here, according to the Economist this is good ?because immigration authorities have taken to booting out work-permit holders after six years given the term limits on works permits?.

The article states that the Island?s international business sector is trying to address some of these issues by encouraging young Bermudians to join the industry by offering opportunities such as summer internships, as well as raising the possibility of underground parking and company consolidations to save space. But it points out that Bermuda could ultimately lose out to the many other jurisdictions that are lined up as alternative choices for companies looking to either set up offshore, or even relocate from the Island, if our infrastructure issues outweigh the benefits of being here.

It says that while reinsurers would probably not move back to London, they may see Dublin as a good alternative for expansion. It also suggests that captives might see the Cayman Islands and Vermont as suitable alternatives to Bermuda.