An article in a UK magazine gives Bermuda top marks for attracting new insurance business but also begs the question - how much can Bermuda's infrastructure bear.

Reinsurance publication Global Reinsurance (GR) featured the Island as its February cover story, and cited the Island as the "new front runner" in the insurance industry.

Written by editor Sarah Goddard, the article looks at how "Bermuda is forcing its way to the front in this brave new world", but at the same time questions infrastructure limits set by Bermuda's small size.

While praising Bermuda as an insurance domicile on numerous levels, the story concluded: "On a densely populated island of about 60,000 inhabitants, infrastructure strains are a nagging issues. Housing is in short supply and is extremely expensive, while schools and roads are pushed."

In addition, Bermuda "may find itself squeezed on the infrastructure capacity, as well as a shortage of skilled practitioners", according to the story.

The story goes on to say that, so far, the new companies are being headed by well-respected market figures. But it adds: "Filling posts further down the corporate ladder may, however, prove more difficult."

The Global Reinsurance (GR) story follows a steady stream of industry reports in recent months - including stories in The Review: Worldwide Reinsurance, Business Insurance, Best's Review and reinsurance: Global Risk Analysis - touting the Island as an insurance "domicile of choice".

The reports have largely focused on Bermuda's ability to capture significant business and capital following a void in capacity after September 11. And there have been numerous media reports on the Island's increasing ability to attract business that would have historically gone to the London market.

Despite infrastructure issues, Bermuda generally gets the thumbs up for its ability to adapt to the changing demands of the market.

The GR article states that Bermuda has historically attracted insurance business following insurance capacity crunches: "Bermuda's kick start into the world player stakes started with the US liability crisis in the mid-1980s. (And) Hurricane Andrew in 1992, triggered the second wave of company formation in Bermuda....and the recent withdrawal of capacity has helped catalyse Bermuda's third wave."

Highlighting the Island's ability to move quickly when opportunity strikes, the article states: "While some markets frantically tried to assess exposures, losses and the changed nature of insurance, Bermuda stole the march on assessing investment markets and other capital sources."

The article adds that the ability to get a new company up and running quickly is also key: "Bermuda's regulatory environment has helped. It takes between six and eight weeks to set up a reinsurer on the island, if there are no major hiccups. By contrast, setting up a reinsurer in London is more likely to take nine months."

And Bermuda's strength as an insurance jurisdiction is also said to be tied to the presence of industry leaders ACE and XL.

"Both have proved that the model works, and both dominate in the global business stakes," the article states.

"Through their development, Bermuda went from being the incubator of the industry, through high school and now has surely reached post-graduate status."

Location is another reason cited for the Island's success, with Donald Watson, a Standard & Poors director, predicting: "Bermuda will see a healthy influx with its one-hour time lead over New York working in its favour."