Bermuda is in the firing line of a group of US insurers who hope Congress will pass a bill to level the playing field by requiring the American subsidiaries of foreign insurance companies to pay American taxes.

That is according to a report in The Stamford Advocate, a Connecticut-based newspaper, which cited William Berkley, chairman and CEO of Greenwich-based property casualty insurance firm WR Berkley and spokesman for the Coalition for a Domestic Insurance Industry, as saying he hoped to get the legislation pushed through because of the competition with foreign companies that are exempt from paying tax.

Meanwhile US Representative, Edward Neal (Democrat, Massacusetts), chairman of the Sub-committee on Select Revenue Measures, who introduced the bill on September 18, said that offshore affiliates' share of the US market has grown from 5.1 percent to 10.9 percent, representing $54 billion in direct premiums written in 2006, claimed the report.

"Again, Bermuda-based companies represent the bulk of this growth, rising from 0.1 (percent) to four percent," said Mr. Neal.

"Bermuda is not the only jurisdiction favourable for reinsurance, and in fact earlier this year, one company moved from the Cayman Islands to Switzerland, citing 'the security of a network of tax treaties', among other benefits."

The US government has lost $20 billion to $30 billion in revenue over the 10 past years by foreign insurance groups based in the US reinsuring their risks in tax havens like Bermuda, Mr. Berkley is quoted as saying.

"There are a lot of ways you can get around US taxes," he said.

According to Mr. Berkley, said the report, $58.4 billion of US premiums went to foreign insurance companies, with nearly 60 percent of those premiums going to affiliated reinsurance companies. Since 1996, US premiums going to foreign reinsurers have increased annually by 21.4 percent.

Mr. Berkley added that US-based insurers, which pay about 35 percent in taxes, may start moving out of the country to remain competitive if the bill is not passed.

"By paying no taxes, you have a competitive advantage," he said.

The loss of the US' major insurance companies could result in ruining its insurance industry and depriving the government of billions of dollars in tax revenue, Mr. Berkley said.

"It's been getting more and more severe every year," he said.

"We're hoping this bill gets passed in the next year."

Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers is lobbying against the effort, claiming that if the new law is passed it may cause insurance premiums for Americans to increase by forcing foreign reinsurers out of the US market and lessening competition.

"If you're a nurse in Fairfield County, this will raise your liability insurance," he said. "The beneficiaries are Berkley's companies."

Bermuda reinsurers will pay two-thirds of the $1.5 billion reinsurance payout to the Texas Windstorm Insurance Association for damages related to Hurricane Ike, Mr. Kading said.

"Bermuda and European reinsurers write the overwhelming majority of reinsurance that protects US consumers from hurricanes and earthquakes," he said in a statement.

"Bermuda's reinsurers were the largest non-payers of claims from hurricanes Katrina, Rita and Wilma."