I don't know if anyone else saw the recent article, written by David Pilla in AM Best, called "Barbados Seeks Leading Financial Services Role". When I read the article I almost choked because of its implied meaning.

In my opinion this article was a clever swipe on Barbados' behalf at Bermuda for being in the press so much lately. The article pointed out how "unique" Barbados is because it works to establish "dual treaties with one country at a time, in order to address the tax laws peculiar to that country". It further stated that Barbados has a full fledged treaty with the US which makes captives that set up there more transparent than if they set up in other jurisdictions. Chris Evans, president of Barbados-based Towner Management, stated that Bermuda has a limited treaty with the US while Cayman has none.

The article concluded with Evans saying: "We're (Barbados) the only domicile deleted from the list (OECD) without having to make major changes in our infrastructure or regulations.

Interesting that Pilla chose to conclude his article in this way. One of the high marks Bermuda received from analysts I interviewed about Bermuda is the fact that Bermuda is always open to reports being conducted and tends to respond to the recommendations made. Many feel that Bermuda has nothing to hide and is very willing to work with them. In addition, the changes recommended by the OECD were already in the process of being worked on but were just expedited by its recommendations. None of the changes recommended were in anyway major. As a matter of fact, Bermuda was applauded for its mature offshore jurisdiction status.

What other jurisdictions seem to be doing now is riding on the coat tails of the bad publicity Bermuda is receiving because of the poor global economy. Some of these jurisdictions are using this time of upheaval in the world to opportunistically sell their advantages over "bad" Bermuda. These jurisdictions recognise that now is the time for them to capitalise on the reservations many of the large US corporations have about setting up in Bermuda because of the negative feedback they may get in the US as a result.

When I saw the article in AM Best I immediately thought back to the time in the 1980s when Barbados was a serious threat to the Bermuda economy because of the favourable treaty it signed with the US. And Bermuda had none thereby putting Barbados and Bermuda on an unequal playing field as far as taxes were concerned. Bermuda, through the hard work of then Premier Sir John Swan, lobbyists in Washington as well as numerous lawyers, managed to sign a similar treaty with the US.

However, realising very early on that becoming a tax haven was not the only way to attract business to the Island, many worked hard to make sure the infrastructure was in place to accommodate the needs of international companies. As a key part of the infrastructure, Bermuda worked to cultivate a partnership between the business community, government and regulators to enable companies that chose to set up in Bermuda to work as efficiently as they can.

Bermuda has long since banished the image of selling itself as a tax haven because of the implications of doing so but rather promotes itself as being a user friendly jurisdiction in which to operate. The fact that the capital markets chose to invest over $10 billion in new capital in the insurance industry in Bermuda to fill the void left from the devastating effects of September 11, 2001 speaks volumes and should be shouted from the rooftops.

These new companies did not choose Bermuda because of its low tax regime. Instead, these companies chose Bermuda because of the partnership between the business community and government. One company who chose to headquarter in Bermuda was originally looking to headquarter in London, only to find that it would take them a year to set the company up. It took six weeks in Bermuda. Can other jurisdictions provide the same level of efficiency combined with professionalism as this? These are the questions companies should be asking before choosing one jurisdiction over another.

They also should be concerned about what happens once the company has been incorporated. Does that jurisdiction have a proven track record for successful companies? Does it have the work force to provide the services needed to allow the company to hit the ground running? Does it have the service providers, i.e. lawyers, accountants, actuaries, auditors, captive managers, brokers, and bankers to service their needs? Does it have the necessary telecommunications to be able to allow companies to act as virtual companies should the need arise? How easily accessible is that jurisdiction for clients?

Any jurisdiction that tries to sell itself based on a tax treaty it may have over other jurisdictions is playing with fire particularly in light of the tax scrutiny environment we currently find ourselves in. Tax treaties can come and go but at the end of the day if that is all a jurisdiction has to offer, where would it be without it?

The one good thing that came out of this article is that Barbados is hosting a conference from March 5-7, 2003 to target international insurance, banking, trusts, business companies and regulatory issues. I think our business community and regulators should mark these dates in their calendar and make sure someone from Bermuda attends. It doesn't hurt to know what our fellow allies or foes are doing now does it.

It's never good for us in Bermuda to think we have surpassed other jurisdictions and think we can sit on our laurels. We are in a leading position in the minds of those controlling major capital globally for the moment. In order to maintain that position, we must work hard because there are others waiting for us to fail.

Cathy Duffy is a Chartered Property Casualty Underwriter (CPCU) and is now a freelance writer. She is a former executive of Zurich Global Energy and has 15 years experience in the insurance industry. She writes on insurance issues in The Royal Gazette every Monday. Feedback crduffycw@bda.bm