because of the ease of incorporation on the Island, a front page article in yesterday's Wall Street Journal has reported.

The article in the major business newspaper in the US -- the latest in a series of high profile pieces on the Island -- also claims Bermuda has gone from being the "third world of insurance'' to a major centre for high risk insurance.

The newspaper claims that more than $4 billion in new capital has poured into domicile in recent months.

And it gives much of the credit to Mr. Robert Clements, the president of insurance broker Marsh & McLennan, which has backed several Bermuda-based insurers.

Mr. Clements is "astonished'' by the changes in Bermuda, the story said.

"Bermuda, once ridiculed as the "Third World'' of insurance, a place where an insurance company was little more than a mail drop, has emerged as a major centre for high risk coverage.'' It also revealed that Marsh & McLennan and JP Morgan are reported to be seeking to raise $500 million to invest in insurers, including start-ups to meet soaring demand for catastrophe insurance.

"But perhaps the main impetus is the trouble at Lloyd's of London. Before devastating losses pushed the 306-year-old insurance market to the brink, the coverage now being written in Bermuda would have been written at One Lime Street, London,'' the story said.

The story also focuses on ACE Ltd., the highly successful Bermuda-based excess liability insurer formed in 1985.

"The way ACE writes insurance makes it less susceptible to the sorts of claims that devastated Lloyd's,'' according to Mr. Clements.

"ACE can never fall into a similar pit as Lloyd's because the ACE insurance policy specifically obligates it to pay only claims to companies that maintain their coverage. If a company cancels, it gives up the right to file a claim,'' he said.

However, the story questioned how much longer Bermuda could win new business at the expense of the "formidable presence'' of Lloyd's. And it predicts "a surge of big claims could hit Bermuda like a hurricane''.

"Indeed, trouble at just one of the companies could shake the entire market.

Asked what keeps him awake nights, Bermuda's insurance commissioner, Malcolm Butterfield, replies: `The failure of one of these companies.'' The Wall Street Journal calls into question Bermuda's ability to succeed where Lloyd's failed, when the liability companies and reinsurers are vulnerable to the same devastating forces.

Will Bermuda be a victim of its own success and become complacent as Lloyd's did in the Eighties economic boom, the paper asks.

On a practical note, the new insurance companies are said to be having trouble finding offices and employees: "Office space on Victoria Square, the Island's insurance hub, is scarce.'' "The new reinsurers, as well as the excess-liability companies, might have been set up anywhere. But Mr. Clements and the others like this Island largely because of its easy regulation.'' Bermuda-based insurers can bypass the US regulatory system which entails obtaining licenses to operate in a particular state and also getting approval for their policies.

It takes years to wade through state bureaucracy to get a start-up company in operation.

"But, in Bermuda, a company can get going quickly because officials mainly care about its financial health and don't second-guess business matters,'' the stry concludes.