Dubai has set out its stall to encroach on Bermuda's traditional territory of captive insurance and reinsurance.

Speaking on yesterday's opening morning of the World Insurance Forum (WIF), the Governor of host venue the Dubai International Financial Centre (DIFC) Omar Bin Sulaiman said insurance needs were growing rapidly in the Middle East.

But WIF Advisory Committee chairman Michael Butt said Dubai would complement, as well as compete with, Bermuda in the global insurance market in the years to come.

Mr. Butt, who is also chairman of Bermuda-based Axis Capital Holdings, said that moving the event off the Island for the first time to Dubai, was a reflection of the Arabian city's growing importance as a financial centre.

Dr. Bin Sulaiman said global players in the industry should see Dubai as a platform for gaining exposure to a region with a population of 2.1 billion people, stretching from India to North Africa. At present this region represented just 0.2 percent of the world insurance market, but economic growth would make boost that share rapidly, he added.

"We have been building a captive market here in the hope that reinsurance companies will follow, thus creating a cluster effect, " Dr. Bin Sulaiman added. "Many companies are already here, including AIG and Flagstone Re, from Bermuda. We want to continue our focus on driving this market."

Takaful, or insurance compliant with Islamic rules, was a rapidly growing market segment, in a booming Middle East insurance industry, Dr. Bin Sulaiman said.

In the Gulf states, Takaful increased by 40 percent last year to around $2 billion and would increase to $7.4 billion by 2015, he added. Swiss Re has launched its own

Takaful product and Dubai expects more overseas insurers to follow suit.

Meanwhile, the insurance market in the United Arab Emirates grew by 27 percent in 2006 to $2.7 billion in premiums written, despite achieving a penetration of only 1.7 percent, as a percentage of GDP, compared to an average of 7.5 percent elsewhere in the world.

WIF has been held every two years in the Fairmont Southampton resort, but this week it has a new host in the DIFC.

"It's our view that there will be five or six financial centres in the world, which are going to attract clusters of companies and services," Mr. Butt said yesterday.

"Singapore, Bermuda, for insurance and reinsurance, and five or six others, of which Dubai will be one, because of resources and the commitment behind it. You could argue that Dublin and Zurich could be others and probably one in Latin America.

"As probably the world centre of capital for the insurance and reinsurance business, what we care about is that standards around the world become common and higher, so we can play on a more even playing field around the world.

"That should make the competition fairer and more transparent and more professional," Mr. Butt said. "For Bermuda's sake, we want to try and achieve those objectives over time. We have to keep working at that objective. It's a moving target."

Dubai is setting high regulatory standards and that could help to pull others in the region up to similar standards, Mr. Butt added.

Dubai can be complementary to Bermuda, rather than competitive with us," Mr. Butt said. "I don't see Dubai being global, as Bermuda is, because Bermuda sits between London and New York and has a convenience factor that Dubai, geographically doesn't have.

"However, there'll be things that could be put here that could have been put in Bermuda, so there will be competition. It's complementary because we need centres of excellence around the world with which we can do business with confidence, with the right standards. Much like London is a competitive and complimentary for us."

His own company Axis was doing a lot of Middle East business, he added, and others would get involved, whether or not they were based in the region.

"Axis does a lot of business in the Middle East, but it does it through the broker distribution system, through London, Zurich and Dublin.

"Is any major player ultimately going to be involved in this region? Without a doubt. How companies do it, they will choose."