The London market is under threat if it does not update its business model in response to ongoing challenges, a survey of senior executives from Lloyd's companies and brokers has warned.

The survey by Microsoft and SunGard revealed 55% thought Lloyd's was under threat as a market, with 52% citing Bermuda as a big threat, and 88% citing operating costs as a major problem.

One senior executive in the survey said: "The London market distribution model is both a strength and a weakness. It needs updating in response to threats from Bermuda and other centres."

Steven Haasz, Lloyd's director of change management and human resources, said: "The Lloyd's and London market is in good shape. At Lloyd's, we have had three record years of profits in recent years, and the market's strength was shown last year when it reported only a small loss in the face of the worst hurricane season on record."

He added: "Bermuda is a good place to write a certain type of business, but Lloyd's is structured differently and both of us can do well."