Douglas De Couto believes Bermudians will feel “shock” over the $20.8 million gain that insurer Allshores booked from a Bermuda tax credit.

The Shadow Minister of Finance was reacting after The Royal Gazette reported yesterday that Allshores claimed the credit under the substance-based tax credit regime that was created by the Bermuda Government as part of the corporate income tax framework.

Commenting in its annual review for 2025, Allshores said it does not expect to be liable to pay any CIT in the near term, but under the regime it is still eligible to claim the credit.

Mr De Couto argued that the benefit of the tax credit should be passed on to the insurer’s customers.

“Recent news that the Allshores insurance company made a $21 million gain from tax credits will shock most Bermudians, as they struggle with the cost of living, including insurance costs that go up and up every year,” Mr De Couto said.

“The One Bermuda Alliance firmly believes that these tax credit benefits must flow straight through to the Bermudians who pay the insurance premiums.”

The OBA’s Reply to the Budget proposed regulation of local insurance companies should be expanded to include premium and rate changes.

“Bermudians have seen their insurance costs go up and up each year, with no transparency or accountability for the changes,” Mr De Couto said.

“A regulator such as the Bermuda Monetary Authority should review proposed local insurers’ rate changes to make sure that any changes are justified and fair to consumers.

“This approach is widespread in the United States and other jurisdictions, where home and auto insurers must have rate filings approved before they can make changes.”

He conceded that regulating insurance rates does not always mean premiums will go down, as underlying operations and reinsurance costs may be rising.

“But Bermudians could at least feel confident they were being treated fairly,” Mr De Couto said. “This is even more important given the dominant market position of Allshores.

“Our single electrical utility, Belco, is regulated due to its critical role for Bermudians and the island — shouldn’t local insurers be as well?”

He added that regulation of local insurers should include whether they can own and operate medical practices and pharmacies, and how they control customer choice for prescriptions.

“Some of these initiatives by insurers are intended to reduce costs, but it’s also easy to see how they can be abused to increase company profits at the expense of Bermudian policyholders,” Mr De Couto said. “A trusted regulator such as the BMA can make sure that policyholders’ interests come first.

“The OBA would also convert the 3.5 per cent per cent financial services tax on insurance premiums to a sliding scale, to provide targeted relief for those who would benefit from it the most.”

A spokeswoman for the Ministry of Finance last night responded to a question from The Royal Gazette on how a company that does not incur CIT is able to claim substance-based tax credits.

“Substance-based tax credits are available for Bermuda groups whose revenues are derived primarily from insurance operations, as set out in the eligibility criteria in Section 6 of the Tax Credits Act 2025,” the spokeswoman said.

“This criteria is applied without reference to whether or not the group in question is a corporate income taxpayer, meaning that Bermuda insurance groups without a corporate income tax liability could qualify for Substance Based Tax Credits.

“The overall policy behind the establishment of substance-based tax credits aligns with the recommendations of the Tax Reform Commission in their 2025 report.”