Chancellor Gordon Brown needs to reduce the tax burden on Lloyd's of London insurers to avoid losing business to the Caribbean, says Lloyd's group insurer head man Dane Douetil.

Mr Douetil, who is the chief executive of Brit Insurance, has warned that London-based insurers are running the risk of losing business to the bourgeoning Bermuda-based reinsurance sector if tax rates stay at their current levels, the Financial Times has reported.

If the government does not take action now, the London insurance market will go the same way as our manufacturing tradition – offshore, the UK business newspaper quoted Mr Douetil as saying.

The Brit boss is calling for a radical rethink on tax rates for London reinsurers, suggesting that the current rate of 30% should be slashed to just 10% in order to make the UK located firms competitive.

The call comes as the Lloyd’s group has already drawn up a three-year strategy to tackle the growing threat from Bermuda.