Swiss business service providers have travelled to Bermuda and spoken with re/insurance industry leaders in an effort to persuade them to relocate their companies to Switzerland.

The revelation came from Hiscox Bermuda chief executive officer Charles Dupplin, who said that he was one of the executives approached by the Swiss.

In a wide-ranging interview with The Royal Gazette, Mr. Dupplin also said further tax increases on international business could turn out to be an “own goal” resulting in jobs leaving the Island and less tax revenue for Government, rather than more.

And in a wish list of things he’d like to see from the new Premier, to be chosen by Progressive Labour Party delegates next month, Mr. Dupplin highlighted budgetary belt-tightening, plans to improve the local postal service and security in the face of rising gun crime, as well as a clear message on the future of international companies’ exemption from corporate tax, due to expire in 2016.

The past two years has seen several Bermuda insurance groups move operating units and capital, or holding companies to Switzerland.

Ace Ltd. started the ball rolling in 2008, when it moved its holding company from the Cayman Islands to Switzerland, and now holds it board meetings in Zurich instead of Hamilton.

Since then Switzerland has benefited from other corporate restructuring. Class of 2005 reinsurer Flagstone moved its capital to the Alpine country, Lloyd’s insurer Amlin redomesticated its Bermuda unit to Switzerland and Bermuda-based Catlin set up a new reinsurance company there.

“In these offices, we have had Swiss service providers, who have invited us to sample their wares,” Mr. Dupplin said.

”They were not persuasive to us, but I could see why a number of points they made might be persuasive to others.

”It’s natural that others should snap at the heels of Bermuda, which is by far the biggest offshore insurance centre in the world. But it is something that Bermuda, as a jurisdiction, should be considering.”

Mr. Dupplin said he had lived in Switzerland and considered Bermuda a better environment for doing business, particularly for those used to the UK and US way of doing things.

Hiscox, a major player in the Lloyd’s of London market and an insurer for more than 100 years, changed its domicile to Bermuda from the UK four years ago. The company also has an operating platform on the Island, with a staff of around 40 working out of offices in Wessex House, on Reid Street, writing primarily property and health care reinsurance.

The rise in the cost of doing business here has become an issue of growing importance for international company bosses. It is a significant factor when considering where to create new jobs.

”When you take on a junior accountant, it’s much more expensive to do it here, than in London, and more expensive again than Lisbon, where we also have an office,” Mr. Dupplin said. “Bermuda is three to four times more expensive than Lisbon.

”The recent increases in employment tax have only served to exacerbate the cost differential. I think we are pretty close to the point where, for some of the larger employers in Bermuda, it might be worth their while to export a lot of jobs outside Bermuda.”

He conceded that some of this was down to the Island’s high cost of living. But the rise in payroll tax announced in the last Budget, from 14 percent to 16 percent, was a controllable factor. The payroll tax cap for high earners was also raised from $350,000 to $750,000.

”If a loaf of bread costs $7 in A1 and 59p in Tesco’s in London, then of course, you have to pay people differently,” Mr. Dupplin said

.”But the controllable thing is employment taxes. They’re grappling with how much more they can stick to the international companies, without it becoming a case of taxes increasing and the taxable pot going down as jobs are exported overseas. Were that to happen it would be an own goal, because less tax comes in the door.”

The cost of employing people here makes it difficult for me to justify to my own board, if we needed ten more staff, that they should be taken on in Bermuda. I’d like to see this openly debated and I know that ABIR (the Association of Bermuda Insurers and Reinsurers) is keen to put this to Government. I think this is something the Government needs to grapple with before the next Budget.”

As an insurance centre, Bermuda starts with a major advantage over its rivals, in that it has 2,000-plus industry professionals working in a small area, Mr. Dupplin said. Many had moved here from overseas and would need several good reasons to move back.

Asked what he would like to see from the person who will replace Ewart Brown as Premier next month, Mr. Dupplin mentioned four factors that weigh in international companies’ evaluation of a jurisdiction.

First, economic stability. Bermuda had traditionally scored well in this regard, but now had “budgetary issues”, including rising public debt. Mr. Dupplin said the new Premier might do well to follow the example of the UK’s new coalition government.

”Having been in the UK recently, I’ve seen the brilliant way in which the new government has got the message across to the whole country that we need to tighten our belts,” Mr. Dupplin. “Everyone from dukes to dustmen is doing it.

”I do believe that here, there is a certain amount of failing to face up to the reality that belt tightening is needed and for everyone to realise that to get back to a really good economy, everybody has to give something up.

”With the wave of popularity a new Premier would enjoy, this might be a good opportunity to get that message across.”

Secondly, international businesses mapping out their long-term plans needed to know whether their exemption from corporate taxes would continue beyond the current 2016 expiration date.

”Businesses hate uncertainty and this is something that could be cleared up pretty rapidly by a new administration,” Mr. Dupplin said.

Third was security. The rising incidence of gun crime was of concern to the international business community, he said, and the rising murder rate was something other jurisdictions could point to as one more reason to leave.

Mr. Dupplin added that he was impressed by the way Police Commissioner Michael DeSilva was tackling the problem and hoped to see more support coming from all sides of the community.

Fourth on Mr. Dupplin’s wish list for the new Premier was an improvement in the postal service.

”An efficient postal service is vital to Bermuda,” he said. “Like other international companies we have contracts that stipulate that documents have to be delivered by post. It can be quite serious if something like a letter of credit is delayed in the post.

”I really would appeal to the new Government to invest in the Postal Service. People and businesses need it to work at maximum efficiency.

“For a country that used to have one of the best postal services in the world under Mr. Perot [William Bennet Perot was Hamilton’s postmaster from 1818 to 1862], Bermuda should have an international gold standard service.”