Premier Paula Cox has hit back at Cayman Islands’ plans to lure reinsurers away from Bermuda after the head of the Caribbean island announced their intentions at an insurance conference this month.In a six-point speech to the House of Assembly on Friday, Premier Cox hammered home her thoughts saying that while the Government views all competition to the Island’s reinsurance sector seriously, Cayman doesn’t currently have the infrastructure, “human capital”, stability, reputation and the geographical advantage that is needed to attract reinsurers from Bermuda.“Make no mistake that we will fight aggressively and continue to support our market and will continue to be nimble and innovative in protecting Bermuda’s turn and our national interests,” she said.“However, based on our current understanding of the Caymans’ proposal, and provided that we remain focused on our strategies of collaboration with our business partners to enhance our enviable reputation by: strengthening our relationships with the European Union, UK and US jurisdictions; strengthening our regulations to satisfy the global regulatory agencies; and enacting business friendly legislation, then it is unlikely that this initiative will represent a serious threat to Bermuda’s existing reinsurance market in the short term.”At this month’s Cayman Captive Forum, which drew 1,200 delegates, Cayman’s Premier McKeeva Bush announced the British Overseas Territory’s plan to aggressively appeal to Bermuda’s reinsurance companies with incentives including 10-year work permits for senior executives who hold positions of vice-president or higher, flat or reduced work permit fees and a waiver for normal work permit application requirements.Unlike Bermuda, Cayman is not seeking third-party equivalence with Solvency II, an enhanced regulatory regime coming into effect in 2013 in the European Union, which, according to the Cayman Free Press, “could be attractive to certain reinsurers that are looking for a domicile with a lower capital threshold”.Premier Bush also called for direct one-on-one marketing to reinsurance CEOs and senior executives as well as to law firms both in New York and in “other financial centres” to bestow the benefits of domiciling in Cayman over Bermuda.Cayman has a lot to gain. According to a report on the CNS Business website, capturing Bermuda’s reinsurance industry could net the Cayman Islands around as much in GDP as Cayman’s entire financial services industry currently contributes. The website based this claim on statistics from the Association of Bermuda Insurers and Reinsurers (ABIR).In a shot across Cayman’s bow, Premier Cox responded by saying “imitation is the highest form of flattery” and quoted ancient Greek statesman Pericles: “our government does not copy our neighbours but is an example to them”.She went on to say that “this is not something that is going to happen overnight. There is a great deal of infrastructure that will need to be put in place in order to attract these companies.”Currently Cayman does not levy income, payroll, property or corporate taxes and allows expatriate workers the opportunity to own property. The Cayman Free Press also stated that their island’s “labour costs in the reinsurance industry are also lower than in Bermuda”.In response, Premier Cox said that Cayman will need to assemble a viable employee base with the experience and skill set required to “enable a viable reinsurance centre to be formed” and that, too, takes time.“This is going to take time and while they have identified changes that they intend to make to their immigration legislation, it is unlikely that these alone will be sufficient to sustain a commercial reinsurance marketplace.”Premier Cox also stated that while 10-year work permits might be an appealing proposition (Bermuda announced its 10-year work permit scheme in April), reinsurers “will be attracted less by a domicile’s favourable immigration arrangements than by its stability and reputation”.She cited Bermuda’s close relationships with reinsurance and regulatory organisations, quoting a letter from the chair of the global finance monitoring group, the Financial Stability Board (FSB), which was conducting an evaluation of countries and their adherence to international cooperation and information exchange standards. The letter reads: “Bermuda already demonstrates sufficiently strong adherence to international cooperation and information exchange standards and therefore, no further evaluation is necessary under the FSB’s current initiative.”Additionally, recessionary conditions and a soft reinsurance market, without a catastrophic event on the scale of those such as the 9/11 terrorist attacks and Hurricane Katrina, which allowed Bermuda to attract waves of new companies over the past two decades, present obstacles for Cayman.“The absence of such a catastrophe, combined with the recessionary climate and an already well-capitalised reinsurance market in which rates are generally seen as soft, will make the creation of a new reinsurance industry a major challenge, regardless of where it is located,” said Premier Cox.She also called the Caribbean territory’s credibility into question, saying that Cayman recently signed a Framework for Fiscal Responsibility that was “imposed by the UK Government and that was considered to be non-negotiable”, alluding to consequences arising from Cayman’s debt crisis in 2009 where the Caymans’ Governor refused to allow the Government to borrow more until it had come up with a plan to cut its debt.According to Premier Cox, the new deal promoted by the UK requires its Overseas Territories to adhere to standards that Bermuda already meets.She concluded her speech by saying that this is not the first time the Cayman Islands has made a run for Bermuda’s reinsurance market.“The Cayman Islands has, once again, attempted to copy Bermuda’s model,” she said. “We will continue to be the standard bearer and will not stray from our goal of continuing to make Bermuda the domicile of choice for credible, quality and substantive business.”