The "toughest legislation to govern the insurance industry on the face of the earth'' was approved in the House of Assembly yesterday.

Government and Opposition politicians agreed such measures were necessary although the Shadow Minister of Finance expressed the worry that there may not be sufficient personnel available to carry out the myriad duties.

However Finance Minister the Hon. David Saul said if extra staff were required they would be found immediately, although two extra staff were going to be hired.

Dr. Saul said the old legislation which was passed in 1978, was necessary because of the growth of captives in the late sixties and early seventies.

And protections were needed to protect those involved in the business and that was the current thinking behind the Insurance Amendment Act of 1995.

"In the eighties we saw highly capitalised excess liabilities come to Bermuda, and today, with the new capital injections in the last 30 months, we have exceeded $4 billion dollars.'' Dr. Saul said these developments made it necessary for a new look to be taken at regulating the industry.

Consequently a group of "preeminent people'' had given freely of their time to advise Government and they were also involved in the drafting of the legislation.

Dr. Saul said stratification was necessary in the legislation. There were four different classifications depending on the type of work the company was involved in.

A class one insurance company would usually be a single parent captive which would require a minimum capital surplus of $120,000.

A class two captive would need a minimum capital surplus of $250,000 while class three companies such as Colonial Insurance, Argus and BF&M need to have a minimum of $1 million in capital and surplus.

The final group, that of class four, refers to the largest companies such as ACE and Excel who will need $100 million in capital and surplus.

"We will have tighter requirements than any other country in the world including London and New York,'' he said.

Dr. Saul said a loss reserves test would be carried out and those in classes 3 and 4 would have to produce an annual actuarial report to show the adequacy of their loss reserves.

While class two and three companies needed to produce a report every third year.

No company will be allowed to cut into these reserves without clearance by supervisors.

Dr. Saul said Government did not unilaterally insist on this "fierce controls'', because those persons involved in the business demanded it.

Fines would be levied on a week by week basis after a company was found guilty of a breech in a court of law.

Shadow Minister of Finance Mr. Eugene Cox said while regulation was important, over regulation should never be the goal of legislation.

He thanked Dr. Saul for providing him with a brief before the debate began.

Mr. Cox said that while legislation was important to protect Bermuda's reputation as a business destination, there needed to be adequate qualified personnel to ensure that what the legislation requires is carried out.

To this end Mr. Cox queried the Finance Minister on whether there were training programmes in place so that Bermudians could get the requisite expertise for jobs in this new area.

Mr. Cox praised the "checks and balances'' written into the legislation and the penalties to be levied on those who failed to comply.

Moreover Mr. Cox said the Progressive Labour Party had always felt international business was important for Bermuda and felt it should have its own ministry that would be "a facilitator or conduit for international companies''.

Management and Technology Minister the Hon. Grant Gibbons , said the technical advisors that assisted Government was a good example of the spirit of cooperation between the two groups.

Dr. Gibbons said he expected these regulations to be copied by other jurisdictions in the future.

Mr. Stanley Morton , Special Assistant to Non Ministries said Bermuda has seen many changes in the area of captive insurance and reinsurance since the sixties.

"At this point Bermuda can feel proud of these regulations and people involved in the industry need to know that we can keep the scampers away.'' Mr. Morton questioned Dr. Saul on the impact of the BF&M scandal on the Island's international business.

"This whole thing with BF&M needs to be explained,'' he continued. "Silence creates suspicion and doubt in the people's minds but I think the legislation we have now will prevent that situation from happening.'' Dr. Saul said training for Bermudians was important and that the Bermuda Insurance Institute should be commended for its work.

As a result many Bermudians had attended the New York College of Insurance.

The motion was then passed.