The local economy, the cost of hiring and retaining talent, the burden of global over-regulation, work permits and the recent volatility of catastrophe events are some of the main concerns for CEOs in Bermuda’s insurance industry.Also top of the agenda is the continued soft market and declining premium rates which combined with historic low investment returns have squeezed margins and returns on capital.In an survey of some of the Island’s top business leaders, The Royal Gazette looked at the biggest issues facing their businesses, Bermuda’s viability and reputation as a jurisdiction, the impact of the Japanese earthquake, regulation of the market and their outlook on the economy.Some bosses went on the record and others completed their responses on the condition of anonymity.The expense of employing staff in Bermuda was number one on many of their lists with a growing trend of companies outsourcing their back office and IT operations.Another major worry for chiefs was the spiralling rate of shootings and murders with the fear of Bermuda becoming another “Jamaica”.“The increased level of violence we have been experiencing over the last several years robs the Island of what was once a differentiator as a jurisdiction,” said one CEO.“Gaining control of these social problems will serve to preserve Bermuda as a viable jurisdiction.”Marty Becker, president and CEO of Alterra Capital, said that as an intrinsic part of Bermuda’s society, international businesses were equally alarmed by the social problems that had recently manifested themselves in extreme violence.“We fear that the anti-social behaviour of a few of Bermuda’s citizens could have a far-reaching and devastating impact on the economy and well-being of the Island as a whole,” he said.Another CEO praised the Bermuda Police Service for the success it had achieved in tackling crime. Their efforts, in addition to the reversal of the payroll tax increase this year, a strong moral tone from Government, movement on the immigration front and the woes suffered by its competitors had improved the Island’s outlook as a jurisdiction.Tightening up on national fiscal discipline and reducing the country’s debt in order to promote a more stable and sustainable environment for investment, while raising the standard of the school system, cutting the red tape surrounding work permits, being more strategic and better resourced in order to attract companies to Bermuda, maintaining the Island’s competitive edge and improving dialogue between Government and business leaders was also paramount to bosses.“Bermuda needs to improve educational standards to build a talent pool that is suitable for the work required, ensure that the island is perceived as a safe and desirable destination for talent and businesses, and manage regulation and taxes in a thoughtful manner and with appropriate input from business,” said one CEO.Mr Becker said that it was essential for Bermuda to maintain its reputation for effective and efficient regulation and he had been encouraged to see the Island be selected for the first round of Solvency II equivalency testing by CEIOPS.“We are also encouraged by the steps that Bermuda’s new Government is taking to review certain policies that have affected the cost and/or ease of doing business in Bermuda,” he said.“While we are global companies generally committed to Bermuda, it’s important to recognise that our primary responsibilities are to our shareholders and we must view Bermuda through this lens.”The earthquake and tsunami that struck Japan on March 11, described by many as a “game-changer event”, is expected to have a big effect on many Bermuda-based re/insurers with short tail rates likely to rise and profits depleted, and in some cases losses being reported for the first quarter and full year as estimates exceed international property catastrophe premiums, in addition to significantly reducing capacity in advance of the US hurricane season.“Aggregated with a series of other catastrophic events like the Australian floods and New Zealand earthquakes compounded by any degree of severity in the upcoming wind season, this Japan earthquake will have played its part in moving the market,” said one CEO.Another CEO raised concerns over the industry being lumped in with the financial services sector and being regulated like a “Lehman Brothers” or “Allied Irish Bank” as a result, believing that the cost and complexity of international regulation and Solvency II being an “extraordinary” burden for little or no benefit, doing nothing to prevent the next crisis.Another said that any regulatory framework that ignored the global element of the insurance industry had the potential to be damaging and it was critical to gain Solvency II equivalence provided it meant greater transparency, security and efficiency, while a counterpart said that the Bermuda Monetary Authority was a regulator to be proud of compared to some poor quality ones in the developed world who proved a turn off to insurance business and others who were too slow and used unnecessary bureaucracy.As far as their projections for the future, one CEO said he was pessimistic about a local economy which had become highly dependent on international business for jobs and money and didn’t foresee many, if any, new formations in Bermuda or elsewhere as a result of the catastrophes in the first quarter.“The challenge that Bermuda faces today is that the international re/insurance industry is in a down phase and so it is unrealistic for Bermuda to look to this industry to drive job creation for the next few years,” he said.“As a consequence, Bermuda and Bermudians must take the lead in reviving the local economy.”Another CEO was more upbeat on the economic situation, predicting a recovery over the next year, while one believes the contrary that it will get worse before picking up over a prolonged period of time.One CEO views further major disruptions in the global insurance market which have in the past spawned new start-ups and capital inflows to Bermuda as a potential catalyst for change.Mr Becker said: “We expect conditions to remain very competitive in our industry throughout 2011. We do anticipate some improvement in rates and volumes in certain lines as a result of increased demand, particularly where premiums are directly correlated to sales and payroll numbers.”