insurance companies at its current one percent rate, The Royal Gazette has learned.

The possibility was raised yesterday at an insurance seminar.

The tax is levied on insurance premiums ceded by US domestic insurers to offshore domiciles such as Bermuda.

The US Congress and the Clinton Administration have considered raising the levy to four percent as a revenue raiser -- although such a move could lead to the flight of reinsurance business from offshore jurisdictions.

News that the latest thinking would leave the excise tax at its current rate was spread at an international seminar organised by the Bank of Bermuda at the Princess Hotel.

American tax attorney and former Internal Revenue Service (IRS) advisor Mr.

Bruce Wright said that while the matter was still being considered by US officials, if approved, it would be a positive sign for Bermuda-based reinsurers.

But the seminar the first in a series, also reported on a range of new issues threatening the insurance industry.

Offshore reinsurers are likely to face a fiercer regulatory climate under the Clinton Administration, speakers said.

"The US tends to use a sledgehammer where a fly swatter would suffice,'' said Mr. Donald J. Danilek, senior vice president of private banking and personal trusts at the Bank of Bermuda (New York) Ltd.

Legislators at both the state and federal level are so busy proposing new restrictions, that many reinsurers remain uncertain about how such new rules would apply to them.

Even at the bank-sponsored seminar to increase the local industry's understanding, Mr. Wright and his partner from US law firm LeBoeuf, Lambe, Green and MacRae, Mr. Thomas M. Dawson, appeared to disagree on the implications of certain proposals.

But that is the result of the complicated swirl of proposed new changes.

Mr. Wright and Mr. Dawson indicated that as regulators sought to ensure the solvency of the companies that wrote insurance in the US, individual states were hungry for business while considering proposals that could have an adverse effect on the reinsurance industry.

Other challenges for the industry include: US states being forced to upgrade their insurance legislation in order to continue to receive accreditation; Reinsurers receiving their won accreditation while faced with widely different -- and constantly changing -- regulations in each state; and State regulators frequenet wariness towards offshore insurers because of the difficulties of recovering funds in situations of fraud.

The interest in the various issues was evidenced by a strong industry turn-out for the seminar.