Buyers of life products from BF&M Life Insurance Company Ltd., a subsidiary of BF&M Ltd., would have there accounts individually segregated, under a private members bill proposed by the company.

The bill, the BF&M Life Insurance Company Limited Act 1995, which received readings in the House of Assembly last week now goes to the Senate.

Under individual account segregation, the assets of one policyholder are kept separate from the assets of other clients and thus protected from creditors if insolvency occurs.

The Insurance Act already requires different lines of insurance to be segregated but separating individual accounts goes one step further.

The move adds an additional layer of protection for the policyholder and can be a competitive mechanism for the company.

Jurisdictions -- like Cayman -- which have individual policyholder segregation legislation may be at an advantage over Bermuda when pursuing this very important market which is a relatively new and growing line of insurance for Bermuda, said BF&M Life vice president Ms Judy Panchaud.

"BF&M Life is merely seeking private legislation which has been successfully obtained by others, in particular exempted companies, so that the company is in an excellent position to compete on a commercial basis for certain types of business which may go to other countries,'' she said.

"This concept is well known outside Bermuda, as well as within Bermuda, and has been the subject of numerous private Acts for exempted and local companies.

"This is particularly important for certain types of annuities designed to meet the needs of US citizens who may find it desirable to have such policies issued by offshore insurers,'' she said.

"The purpose of the BF&M Life private Act is to allow the company, for special policies, to set up individual policyholder accounts, legally segregated from other accounts, within the already separate policyholders fund it is required to have under the Insurance Act 1978,'' she said.

It is not unusual for companies to seek private legislation as a supplement to general Bermuda law, she said.

"This is done all the time to protect policyholders. It makes absolutely perfect sense,'' said Finance Minister the Hon. David Saul.

Internationally, segregation of accounts is becoming more popular, said Dr.

Saul.

PLP MP Mr. Stanley Morton said Friday, he was satisfied that the BF&M Life Insurance Company Act is not connected with Bermuda Fire and Marine Life Insurance Company Ltd. (BFMIC).

Mr. Morton concurred with an earlier majority report that concluded the bill is not connected to BFMIC.

"It should be pointed out that, in the case of BF&M Life Insurance Company Limited Act, the (majority) committee carefully reviewed the purpose of the private act being sought. The committee wanted to be assured that this private act had no bearing on the business formerly known as Bermuda Fire & Marine Insurance Company Ltd.,'' the committee said.

"The committee is satisfied that it does not and is further satisfied that the purpose of establishing legally segregated accounts is very important to the potential policyholders.'' BFMIC, incorporated in 1903, was put into liquidation earlier this year. Its operations included domestic Bermuda insurance, international insurance, life business and a real estate holding business.

In 1991 the directors recommended to shareholders a reorganisation of BFMIC's activities. Under the reorganisation, all the assets and liabilities related to the domestic operations were transferred to various subsidiaries, said the joint provisional liquidators, Ernst & Young UK partner Mr. Gareth Hughes and Ernst and Young Bermuda partner Mr. Anthony Joaquin, in their January 6 , 1995 report to policyholders and creditors.

Following the 1991 transaction, BFMIC continued the run-off of its international business, they said.