Bermuda's insurance industry will face "policy challenges" with the new Obama administration on international business taxation and the management of natural catastrophe risk.

That is the view of Bradley Kading, of the Association of Bermuda Insurers and Reinsurers, who said the Island had a good case to make of its value to the US, as Island companies will have paid out around $30 billion in claims over the past seven years to the US by year end. "The US faces an unusually trying future — a future with a troubled economy and a troubled international relations scene," Mr. Kading said. "The new President and the new Congress face many challenges. International insurers, including those in Bermuda, will face policy challenges on natural disaster risk management and taxation of international business. We will make our case to US policymakers.

"Bermuda's insurers provide 66 percent of the private property catastrophe reinsurance to Florida home insurers; similarly we provided two thirds of the reinsurance payments for Hurricane Ike being paid to the Texas Windstorm Insurance Association.

"Bermuda and European reinsurers together provide more than 90 percent of the property catastrophe reinsurance in key US disaster exposed markets. Bermuda's insurers make important economic contributions to the US and our challenge is to continue to demonstrate the valuable role we play in stabilising the American economy. Through our US subsidiary corporate income tax payments and the US federal excise tax payments we pay comparable effective tax rates to those of our wholly owned US competitors."

Mr. Kading believes that President-elect Obama's comments about tax havens were not aimed at the likes of Bermuda insurance companies.

"Sen. Obama's public statements point to companies that move jobs out of the US or create shell companies outside of the US that don't have any economic activity," Mr. Kading said. "Our members create jobs in the US — we have 10,000 US jobs and those jobs generate another 100,000 jobs for US service providers.

"The Organisation for International Investment reports that international insurers employ more than 100,000 people in the US. Our members conduct genuine insurance underwriting operations in Bermuda. We're not just a pretty name plate on the wall — we're actively assuming insuring risk, producing jobs in Bermuda and creating economic value for our global customers. We have a good story to tell to US policymakers."

However he felt that Rep. Richard Neal's proposal aimed at removing Bermuda reinsurers' tax advantages would backfire on the US if enacted.

"Punitive tax proposals such as HR 6969 will increase the cost of insurance to US consumers," Mr. Kading said. "It's enactment may lead to capacity shortfalls in certain classes of business.

"Do voters want their members of Congress to vote for a bill that increases their insurance costs? It's the insurance customers that have the vote here - not the international companies. This issue will be decided by an answer to this simple question: Do US consumers want their insurance costs to rise?"

Mr. Kading, who is based in Washington DC, and who works to raise awareness on Capitol Hill of the Bermuda insurance sector and its benefits to the US, appreciated that the links between the two countries went beyond business.

"Bermuda has many historical, family, cultural and economic ties to the US," Mr. Kading said. "Bermudians are enthusiastic about the election of Sen. Obama. Americans in Bermuda are proud of the terrific performance this year of the democratic process in the world's oldest and most exemplary democracy."