New legislation is in the pipeline that could take Bermuda to the forefront of the world captive and third party insurance market.

The proposals, which will be put before the Ministry of Finance next week, will make it quicker, cheaper and easier for companies in these markets to segregate their existing accounts from one another.

Lawyers and insurance professionals have been working on proposals which will bring Bermuda to the forefront of this kind of legislation.

These individual accounts in which clients' accounts are segregated in some way from other accounts are called rent-a-captives or protective cell captives.

These are a form of captive, an insurance company subsidiary, usually formed to insure or reinsure the risks of the a parent business and its affiliates.

Currently in Bermuda these rent-a-captive companies are set up through a private member's bill which has to be passed by Parliament and can cost between $8,000 and $15,000.

Providing the House of Assembly is not in summer recess, it can take as long as six weeks to have a private member's bill approved.

Bermuda is recognised around the world as a centre for insurance and reinsurance and has been at the forefront of captives legislation for many years.

But recently key rivals to Bermuda in the formation of captives, including Guernsey and the Cayman Islands, have recently passed legislation which makes it easier to form rent-a-captives there.

Now it is feared that business may go elsewhere where it is easier to set up business.

To ensure Bermuda's continued leadership in the area, Bermudian lawyers teamed up with the insurance world and put their heads together to find a way to improve the situation and have come up with a proposal which will make it cheaper, quicker and easier to form protective cell captives. Bermudian law firm, Appleby, Spurling and Kempe helped draft the proposals for the Segregation of Accounts Act 2000 which is currently before the Bermuda International Business Association's Legislative Change Committee and should go the Ministry of Finance next week.

Michael Burns, a partner in the law firm, said that the proposals could help attract more quality business to the Island.

"At the moment there are between 65 and 70 different steps required to shepherd the process through to a private member's bill and all of this racks up cost,'' he said.

"It takes a lot of time and when the House of Assembly is not sitting in the summer, no one can get this done.'' New legislative proposals will allow these types of companies to be formed without having to have a private member's bill put through Parliament.

The new law would mean forming a rent-a-captives company would take a maximum of 30 days, and the cost would be reduced.

Mr. Burns added: "This holds one of the keys to Bermuda's competitive advantage in the areas of rent-a-captives, securitisations, life and annuity business and others including so-called transformer companies engaged in the transformation of insurance risks into capital markets products.'' The Ministry of Finance has not yet seen the draft proposals, but if approved they could go before the House of Parliament either in the Spring or Summer.