SAN FRANCISCO -- Bermuda is facing more intense competition from other offshore jurisdictions.

Here at the RIMS Conference in San Francisco, there is a crowded landscape of Caribbean islands that all know how to double their exposure by playing up the tourism aspect of what their islands have to offer.

Probably most prominent in terms of competition is the Cayman Islands. As an offshore centre, their asset base puts them around number four in the world terms of the largest banking centres.

There are 560 banks in the Caymans, 46 of the world's 50 largest banks. Deputy inspector, insurance, with the financial services supervision department, Mr.

John Darwood, said that new legislation is being drafted that may lead to an increase in the asset base of some of the larger institutions.

The legislation will change secrecy laws that have kept the long arm of the US law from accessing information on criminal activity involving US citizens.

In some respects, the Cayman Islands is moving to improve its image by bringing the changes to laws this year.

Mr. Darwood said: "It is addressing issues that have worked against Cayman's image in the past. By amending the secrecy laws and making them more open in reasonable cases. A lot of the concerns where possible fraud could be involved in new operations can be stopped early. Information can be passed from one domicile to another.

"Cayman is very keen to discourage bad business, any sort of fraudulent business. And if it helps to discourage it by amending the laws, then that's what we'll do.'' Their insurance industry lagged way behind, with significant insurance legislation not coming into effect until 1980.

The number of captives, and their size, has been building since then. Last year was virtually a record year with 45 new captives and this year they are on target for about the same number.

The domicile also has 904 mutual funds and 68 mutual fund administrators.

Meanwhile, Barbados has been watching with concern proposed legislative changes in Canadian tax laws that could hurt their longstanding benefits in captive insurance derived from a Canada/Barbados tax treaty.

There are 208 captives in Barbados, 35 percent of which are Canadian. There have been a dozen new captives registered this year, half of which are Canadian.

Mr. William Layne, supervisor of insurance said: "The major change in Canadian tax law that will impact on Barbados is the definition of "tax exempt surplus''.

"Canadian companies in Barbados are able through their parent companies to deduct the premium for tax purposes. The income of the captive was considered to be tax exempt surplus because 90 percent of the risks they wrote were non-related or non-Canadian, primarily in the United States.

"The new proposals introduces a further restriction that the captive have at least five employees and there is an issue as to whether the captive is considered a resident for tax purposes.

"If it is, then the double taxation aspect of the treaty comes into play and you can't be taxed twice. If it is not resident for tax purposes then the whole question of the income being considered taxable surplus, as apart from exempt surplus, will come into play and the income will be subject to tax as foreign accrual property income.

"We are still not sure whether or not the captives are considered resident for tax purposes. They are exempt from tax but we will have to await word from Canada and a legal opinion on that issue.''