Speaking to a packed meeting at Lloyd’s Mr McGavick said the industry could not afford to ignore threat it faces on a number of levels from the regulatory change which is sweeping the financial services industry and threatens to push onerous regulatory and capital burdens onto underwriters.

He said regulators had moved away from their core task and were looking to halt the collapse of institutions rather than protect the policyholders.

“We are in a period when the regulator is on the rise, full of solutions and full of problems” he warned. “When I mentioned to a colleague I was going to issue a warning on the problems we face with regulators he likened me to a modern day Paul Revere.”

Paul Revere was an American at the time of the American war of independence who undertook a night-long ride to warn the US rebels that the British Army was approaching.

He said the global regulators has been emboldened by the crisis and were taking every step to ensure it does not happen again.

He added that since the financial crisis he had noticed that every country which had been badly affected had seen a change in the political leadership and that there had been a change at the top of the corporation which had suffered during the crisis.

“However the regulators have not changed,” he said. “We have to ask what role the regulators played in the financial crisis. It is like re-hiring the jailer after a jail break because of his experience.”

He urged the market to do everything it could to affect the regulatory changes which were now being considered.

“Get involved in the process as what is decided will be really important for our industry and its future,” he added.

Mr McGavick said the market had worked quickly and effectively with the policy makers in the wake of the banking crisis and there had been a great deal achieved as the political leaders were aware of the fact that re/insurers had not played a part in the problems and had done remarkably well throughout.

“We have been very effective with the policymakers, but we have failed to kill the vampire. Regulators continue to look to impose new rules on the industry and in the case of the US are doing so behind closed doors.

“This needs to be fought and the battle is certainly not over. Just winning over the policymakers is not enough.”

He said he had been stunned that the UK regulators the Financial Services Authority was putting pressure on underwriters outside of the UK on capital levels add9ig that Lloyd’s had fought for years against the system in the US for collateral requirements only to find that the FSA were looking at artificial capital requirements.

He said the market had proved itself in recent years adding: “I believe we have just gone through as tough a stress test as I can imagine.

“Regulators are looking at the fall of the banking sector and looking to apply the lessons learned on the re/insurance market. If anything it should be the other way round they should look at how we have performed and seek to impose those lessons on the banks.

He added: “Our proposition is simple we are there to deliver a promise to pay and the regulators should be looking to ensure that we deliver on the promise to pay.”

However he said regulators were now looking at how to ensure that underwriters do not fail rather than protecting the policyholder.

“They are not there to protect the investors by ensuring institutions do not fail. As we have seen in the past if an insurer fails the risk are ceded back to the domestic market who will meet the liabilities – we have in many ways developed the answer to the problem.

“We want the policyholder to be paid. We are in business and some times businesses fail. Regulators need to concern themselves with protecting the policyholders not the institutions.

He warned that a major fear was that the Solvency II regulators would not deliver what it had promised which was a single and streamlined regulatory process.

He added: “The real benefit was to be a reduction in the frictional costs of regulation with the Solvency II regime in Europe working alongside other regulatory regimes with a system of equivalency.”

However Mr McGavick said he had met with European regulator who had made it clear that even if the Bermuda regulator was granted equivalency there would still be a round of reporting and compliance for the group’s European operations.

It is what I always feared,” he said. “What we had hoped would become a streamlined regulatory process instead becomes a new super regulatory layer on top of what we already have.”

 He warned that imposing onerous capital requirements would be detrimental to the market.

“We do not want to be in a situation where the capital requirements benefit larger firms as it will squeeze the innovation and creativity which is provided by the smaller niche players out of the market.”