Bermuda is definitely going to separate insurance regulation from Government as recommended in the recent KPMG report, Bermuda's Registrar of Companies Jeremy Cox told RIMS this week.

And Mr. Cox said he anticipates this happening toward the end of next year.

He said: "At the moment we are looking at how to separate it from Government -- whether to create a separate entity or to merge it with an existing regulatory entity.

"We are already committed to the first amendment to legislation which will remove the Minister of Finance from the regulatory process and replace him with the insurance supervisor.

"Then we will create the fully separate entity.'' Mr. Cox stressed that KPMG had found nothing wrong with either the Island's legislative approach to regulation or its regulatory process.

It is becoming best international practice to have the regulator separated from the political process, he said.

Mr. Cox was speaking at Monday afternoon's conference session entitled "Bermuda, Bahamas, Come on Pretty Captives -- Captive Domicile Update''.

Other speakers at the session were from Barbados, British Virgin Islands, Cayman Islands, Guernsey, Hawaii, Ireland, Turks & Caicos and Vermont.

What Mr. Cox said about separating regulators from Government is a move being undertaken by most offshore jurisdictions, though it appears not yet by many onshore jurisdictions.

The Turks & Caicos, represented by superintendent of insurance Harold Wong, expects to have its separation legislation in about six months and Cayman, represented by deputy head of insurance supervision Mary-Lou Gallegos, expects it to happen by next month.

William McCullough, supervisor of insurance, said the British Virgin Islands will be enacting legislation to achieve this, but gave no indication when.

In this comparison of jurisdictions, Mr. Cox was able to proclaim with pride that Bermuda's insurance sector had accomplished, in the last recorded year, $30.4 billion gross written premiums and had $131.6 billion total assets.

While this undoubtedly exceeded figures from the other smaller jurisdictions, he was keen to point out that really this meant that the offshore insurance industry as a whole was a very significant group in global terms.

He said of the KPMG and other reviews: "Some of these studies have helped get the Bermuda message across, that we are looking first for quality then for quantity.'' He said he felt Bermuda had benefited greatly from the influx of intellectual capital in the early 1990s which has helped Bermuda become one of the most innovative insurance centres in the world.

"We are always looking at our legislation so we can continue to be responsive to the industry.

"And we are now introducing a website which will allow company managers to do better and faster business with our department,'' he said.

Ms Gallegos told the audience that Cayman currently has 522 licensed captives from all areas of business.

"We are renowned for our regulatory style.

"We have a regulatory framework that places insurance managers in the position of complying with the laws while satisfying the needs of their clients.'' She said segregated portfolio companies were introduced in 1998 and they currently had 33 licensed which had 143 cells between them.

Also e-filing to the authorities had just been introduced, initially with managers in the captive market, she said.

"We have a recent legislative amendment, the Insurance Prudent Management Bill 2001, which empowers the authorities to refuse to grant or to revoke a licence if we do not believe the business will be properly conducted.'' Mr. McCullough from BVI said he felt cost effectiveness was an important element in jurisdiction choice.

"We are successful because it is less expensive to do business in BVI.

"The level of services offered by a jurisdiction relates to cost.

"We have seen substantial growth in the last two years.

"We have placed ourselves in a sector of the market where smaller companies can enter the captive market in a cost-effective way.'' Turks & Caicos currently have 124 captives but Mr. Wong said much of the industry is centred around reinsurance and they have 2,072 insurance licensees operating.

He said he felt cost was an important factor in attracting business.

"Our capital requirements are lower than elsewhere and our practitioners' costs are lower,'' he said.

He said he also felt Turks & Caicos' attitude to regulation is important.

"Our legislation is very simple but meets the required standards in many cases.

"We felt that if we made the regulations too tight we would have to change them later, and that would not be good for us.'' Mr. Wong said discussions were continuing with the OECD with regard to that organisation's demands, but he said the islands will comply fully with 22 of the Financial Action Task Force's 25 recommendations on regulation,and is reviewing the other three.

Malcolm Cutts-Watson, of Guernsey's Insurance Company Management Association, said regulation in his island was based on assessment of risk and how that risk will be covered.

Once a business plan has been approved it is possible to make changes to it by simply notifying the regulator.

"But we are very active in promotion of international insurance regulation and very heavily involved in introducing anti-money laundering legislation,'' he noted.

"Guernsey is not part of the EU, so does not have to follow EU regulations.'' He added that captives in Guernsey, which number 353, have a menu of tax options to choose from, ranging from no tax to some tax.

Protected cell companies were introduced in 1997 and the island currently has 30 which have 143 active cells in them.

"Initially this business was traditional rent-a-captive.

"Now they are used by multinationals to separate business by territory and we are also seeing cells used in special activities such as securitisations.

"I think this legislation will be adopted worldwide and we could see a move in corporate structures to use of these entities,'' he said.

Carlos Belgrave, supervisor of insurance in Barbados, was keen to tell the audience that, in spite of OECD moves, Barbados does not practice harmful taxation.

"It is competitive taxation,'' he said.

But although discussions are still going on with the OECD, Barbados is already planning to introduce legislation to comply with some of the OECD requirements, such as the establishment of a financial investigation unit and anti-money laundering guidelines.

He said Barbados is not a tax haven but operates under the aegis of a network of tax treaties, the latest being with Venezuela and China.

He said the island's legislation and infrastructure was conducive to captive business and draft legislation is already out for consultation on creating protected cell companies.

The only other island jurisdiction was Hawaii which was represented by Craig Watanabe, captive insurance administrator.

He said: "We have been in the captive industry for 15 years, but have only seen growth in the last few years and have developed an experienced workforce in this sector in the last five years.'' He explained that the island created rent-a-captive laws in 1999 and licensed its first one last month.

Last year it legislated for branch captives, branches of onshore companies, and for captives to be allowed to reinsure.

He said there had been some fallout from the Japanese economy slowdown.

"But we are looking at more opportunities in the emerging Asian market place.'' Jeremy Cox BUSINESS BUC