Bermuda’s premier gets creative with new deal for reinsurers

The Bermudian premier Ewart Brown has proposed a new deal with the insurance community on the island that would see companies pay pro rata for privileges including relaxation of immigration laws.

In an interview with Insurance Times’s sister publication Global Reinsurance, Brown said he wanted to implement the proposal before standing down in October. He said the informal response from industry leaders had been positive.

His comments follow an unpopular increase in the payroll tax charged to international companies domiciled on the island from 14% to 16%, and a doubling of the individual threshold up to which it is paid. Companies do not pay corporate tax and individuals do not pay income tax.

Asked if there would be further rises in payroll tax, Brown said: “To the extent that the Bermudian government would like to benefit from the presence of these companies, we can find creative ways that do not involve taxation.

“My idea is that we would form a menu, and everything on the menu would come at a price. To use the simple example, one company may wish to make use of a special line at the airport, a dedicated service just for people who are in the financial services sector, and if they wanted to take part in that, they would have to pay. If they didn’t, they wouldn’t.”

The Bermudian government is also currently looking at whether to extend the six-year limit for non-resident workers to live on the island to 10 years. Brown indicated the proposal would go ahead, but as part of a wider deal that could see workers agree to renounce claims to citizenship.

He said: “I don’t want it just to appear as an isolated concession – I want it to be part of a new arrangement.

“One of the reasons behind term limits in the first place is that we wanted to get away from the situation the previous government had gotten us into, which was having people in Bermuda for 20 or 30 years, in a no-man’s land as far as citizenship was concerned.

“Some say there’s a way to avoid that upfront, by having the person sign the appropriate documents to say they have no expectation or guarantee of citizenship. That’s what we’re talking about.”

The industry has been cautious in its response, however. “On the face of it, it looks like a positive thing – but we’ll have to wait for the detail, as there could be things in there that would work against us,” one reinsurance chief executive said.