Allshores’ announcement that it will buy back up to $20 million of its own shares — after booking a tax credit for a similar amount — has sparked a call for insurance premium rates to be regulated.

Douglas De Couto, the Shadow Minister of Finance, argued that Bermuda should adopt a system like the United States or the Cayman Islands, where health insurers must seek permission to increase premiums.

Last Friday, Allshores announced a tender offer of up to $20 million, allowing investors to sell back their Allshores shares to the company for $29 each — more than 20 per cent higher than their closing price on the Bermuda Stock Exchange.

This came after the insurer, which was formed by the combination of BF&M and Argus, booked a $20.8 million tax credit for 2025, enabled by substance-based provisions — based on jobs located in Bermuda and on-island spending — under the Tax Credits Act.

The credits, initially limited to the international insurance sector, were introduced with the intention of offsetting the impact of the corporate income tax and to encourage job creation and retention in Bermuda.

Dr De Couto was one of the commissioners on the Tax Reform Commission that helped to draw up a report that was the basis for the tax credits legislation. He was a commissioner from November 2023 until his resignation in February 2025 when he became an MP.

Allshores said in its 2025 annual review that it does not expect to be a payer of CIT in the near term. The $20.8 million credit can be used against future tax liabilities, or refunded in cash within the next four years.

Reiterating the One Bermuda Alliance’s call for insurance premium changes to be regulated, made in the Reply to the Budget, Dr De Couto said: “Allshores will receive a $20.8 million tax credit benefit that will be paid for by Bermudian taxpayers, due to OECD rules about tax credits.

“Instead of using this credit to lower customer insurance premiums, Allshores is giving it to their shareholders with this share buyback, providing a 21 per cent gain over the recent Allshores’ share price on the BSX — that’s a sweet deal.

“But don’t blame Allshores for benefiting their shareholders, that’s how companies work. Blame government for failing to act and put in place the right guardrails.

“Government and many others have known for a while that Allshores would get this tax credit and that’s why the OBA repeats its call for more regulation for local insurers.

“Like jurisdictions such as the United States, and yes, Cayman, Bermuda ought to regulate how local insurers set rates and create relationships with pharmacies and medical providers.

“Regulation to ensure that customers are treated fairly and receive the benefits of any taxpayer-funded tax credits, especially for firms that dominate the market. This is like the Regulatory Authority monitors electricity rates so that Belco does not mint money on the back of Bermudian customers.”

In Cayman, every approved insurer must offer the Standard Health Insurance Contract, which provides the minimum legally required coverage. If an insurer wants to raise the SHIC premium, it must file a request with the Health Insurance Commission and obtain approval before implementing the increase.

This year, CG Britcay Insurance — a subsidiary of Bermudian-based Coralisle Group — applied to increase premiums for its Standard Health Insurance Contract plan by 25 per cent. This request prompted a formal government review. The SHIC has been unchanged for the past 13 years.

In the US, health insurers are generally obliged to file proposed premium increases with state insurance regulators. And in many states, insurers need explicit approval before the increase can take effect.

In Bermuda, Belco must obtain approval from the RA for its required revenue to cover running costs, before rates are determined on the basis of a reasonable return on capital. In its 2026 review, the RA reduced Belco’s proposed revenue allowance of $253.8 million to $236.9 million after review, resulting in a lower electricity rate for consumers.

The Allshores situation also highlights the uneven impact of the CIT within individual local business sectors. While Allshores does not expect to pay any CIT in the near term, its competitor CG Insurance — because of its higher group-wide revenue — expects to be a payer.

Dr De Couto told The Royal Gazette: “Yes, this is a valid concern. A similar issue occurs in the banking sector where not all the local banks are taxed the same.

“We raised these issues in the original debate about the tax credits. However, Government has had a while to handle this issue and has chosen to do nothing — that we are aware of.

“What’s clear is that it is not acceptable that $20 million of taxpayer money is going to the Allshores shareholders with no benefit to Bermudians who face ever-increasing insurance bills.”

The Royal Gazette reached out to David Burt, the Premier and Minister of Finance, for comment.