The US tax policy and international regulation are two of the biggest challenges facing Bermuda's re/insurance market in the future.

That is according to Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, who was the guest speaker at the Bermuda Insurance Institute Spring 2009 luncheon held at the Fairmont Hamilton Princess yesterday.

Finance Minister Paula Cox and Labour Minister David Burch were in attendance at the event.

Mr. Kading said the growth of the Bermuda market had drawn the attention of policy makers, some of whom saw the Island's re/insurers as a threat to the US insurance industry.

In addition, he said, the appointment of new President Barack Obama and a Democrat majority Congress as well as Federal budget needs and revenue raising requirements could have implications for the re/insurance sector in Bermuda.

Mr. Kading said the main issues the Island's re/insurers had to contend with were the US tax policy and whether the US Federal Government would create risk financing programmes that displace the property catastrophe private sector, with a Federal backstop combined with state catastrophe funds substantially impacting the private reinsurance market, including Bermuda, one of its biggest players in terms of business underwritten.

On an international scale, the Bermuda re/insurance industry will also have to get ready for regulatory equivalency, Europe Solvency II and US regulation, he said.

After giving delegates an overview of the work ABIR had done in the past, including with the Coalition for Competitive Insurance Rates, and an update on what stage US Government was at with its tax policy, Mr. Kading, set out the way forward, highlighting the global financial crisis, its impact on capacity, solvency and how policy makers react to it.

"It affects every issue we are working on," he said. "And it is the new challenge for the foreseeable future."