"powerful testimony'' to the increasing acceptability of Bermuda market security, the island's top insurance regulator told a conference of US regulators in Philadelphia.

Registrar of Companies Mr. Kymn Astwood was speaking at a public policy conference sponsored by the National Risk Retention Association (NRRA) and by the Coalition of Alternative Risk Financing Mechanisms (CARFM).

During the conference, attended heavily by US state insurance commissioners, a number of issues were considered, including the questions: "Is the burgeoning capacity of Bermuda as a captive/reinsurance situs of concern to state regulators?'' and "Should Bermuda and other offshore sites have the opportunity to be accredited by the National Association of Insurance Commissioners (NAIC)?'' Mr. Astwood, in concluding a presentation, noted that the Bermuda insurance industry had a long reputation of meeting the needs of insurance and reinsurance buyers whenever the traditional markets have been unwilling or unable to do so.

He said, "Bermuda responded to the North American liability capacity crisis of the mid `80's and the collapse of the world's property catastrophe reinsurance markets in 1992. Both are well documented. In late 1994, Bermuda's insurance industry stepped in again, this time responding to the needs of oil tanker owners and operators -- companies left scrambling for oil spill liability protection required under the United States' Oil Pollution Act of 1990.

"Among the more controversial provisions of the act was a requirement that after December 28, 1994, vessels carrying oil into US waters must hold US Coast Guard-administered certificates of financial responsibility -- instruments backed by approved independent guarantors, effectively guaranteeing the statutory financial liabilities of each vessel.

"The two Bermuda-based insurance facilities formed to provide such guarantees passed stiff regulatory tests imposed by the US Coast Guard's National Pollution Funds Center. This was powerful testimony, not only of the programmes in particular, but of the increasing acceptability of Bermuda market security in general.'' Mr. Astwood did not hide the facts of the August referendum or the recent hurricane activity. He, in fact, opened his speech by using these occurrences to show that everything was back to normal and the Island was stable and open for business.

Putting the best face on it, he said,"It was interesting to note that during the entire affair (the independence debate), the Bermudian people demonstrated a sense of maturity and calm that has been recognised and commended by the international press.'' Mr. Astwood cited the Reinsurance Association of America survey which indicated that Bermuda had overtaken the UK as the largest foreign provider of reinsurance cover to US companies. In addition, Bermuda's newest insurance industry, the property catastrophe reinsurers, currently provides approximately 20 percent of the world's property catastrophe cover.

About the Island's regulatory environment, Mr. Astwood said, "In Bermuda, we have a regulatory system that is often misunderstood, because it is unique. In Bermuda, we have a shared regulatory system where Government works in partnership with the private sector to regulate the Bermuda insurance industry.'' As an example, he explained that every Bermuda insurer is annually required to submit to the Registrar of Companies statutory financial returns, and an audit of the insurer is performed, generally by one of the big six accounting firms, reporting to the regulators the results.

"This allows us to avoid the necessity of maintaining a large team of insurance examiners to conduct audits,'' Mr. Astwood said. "The focus of our insurance regulatory team are the exceptions -- that is the companies deserving increased regulatory attention due to potential insolvency or other non-compliance issues.'' He also spoke of the role of the principal representative, approved by the Minister of Finance, who has a statutory duty to report to regulators any matters that have a bearing on the insurer's financial condition.

Examples include, non-compliance with the liquidity or solvency ratios; non-compliance with any conditions imposed or directions given by the Minister; and, generally any other early warning signs of insolvency.

The principal representative has 30 days to report in writing to the regulators complete details of problems affecting the insurer.