London could lose its position as the world’s insurance industry hub after failing to grab a significant share of emerging markets, according to a report by the influential London Market Group.

The group, which encourages the market’s modernisation agenda, says the city remains the largest hub for commercial and specialty risk. It recorded £60 billion ($109.41 billion) of gross written premium last year, with £45 billion ($82.06 billion) written in the city.

This easily outstrips Bermuda (£25 billion), Zurich (£19 billion) and Singapore (£4 billion).

However, London is achieving global growth in commercial insurance only, and is losing its market share of reinsurance, which fell from 15% to 13% between 2010 and last year.

Crucially, it is too reliant on traditional markets and has not made sufficient inroads into emerging markets in Asia, Africa and Latin America. It holds just 2% of the Asian market.

“More than half of future growth will come from emerging markets, meaning London’s global leadership will become increasingly challenged,” the report says.

Customers prefer to buy insurance locally and fear London’s high regulatory burden could put it at a price disadvantage.

However, it is not all bad news. Opportunities include covering new risks such as cyber, supply chain and reputation.

London Market Group Chairman and Deputy CEO of Willis Group Steve Hearn says London cannot rely on its historic reputation to guarantee future growth.

“The market must react with speed to the global competition, respond with new innovative products and reinforce the message that London is the best place in the world to underwrite complex commercial risks,” he said.

The report – London Matters: The Competitive Position of the London Insurance Market – was compiled by Boston Consulting Group based on 300 interviews with customers and market participants worldwide.