Bermuda’s ‘Tug-Of-War’ With Cayman
Thee “tug-of-war” between Bermuda and the Cayman Islands over the lucrative reinsurance industry is officially on, a recruitment firm for the Caribbean off-shore domicile says today [Dec. 12].
In a blog at its website, CML — which recruits high-level staff for the legal and financial services sectors in that terrritory — says Bermuda has been spooked by Cayman Premier McKeeva Bush’s new immigration incentives and marketing campaign expressly designed to encourage reinsurers to domicile there.
During the recent Cayman Captive Forum, Mr. Bush used the largest captive insurance conference in the world — with 1,200 delegates attending — as the venue for a new strategy aimed squarely at the reinsurance industry in Bermuda.
“What remains to be seen is whether Bermuda’s ‘fight’ will be rhetorical or substantive,” says Steve Mcintosh writing at CNK’s website. ” …Whilst the former will be of limited efficacy, the latter may be politically, or fiscally impossible.
“The main gripes from ‘International Business Companies’ are high costs [housing allowances and payroll tax] and immigration restrictions. There is nothing that can be done about the high cost of living, which necessitates housing allowances to staff at nearly all levels [which can and often do reach six figures per annum for senior staff].”
And Mr. McIntosh went on to point out Bermuda Government expenditure currently exceeds revenue by more than $300 million — and with payroll tax from Association of Bermuda Insurers & Reinsurers [ABIR] members alone totaling $98,000,000 in 2009 … tax concessions seem out of the question. At the same time as being fiscally imprudent it would be grossly unfair (and therefore politically impossible) for any concession to carve out the reinsurance sector.”
He added that Premier Cox “needs to walk a fine line” between protecting the reinsurance companies’ ability to conduct business and the perceived employment rights of Bermudians.
Mr. McIntosh said recent comments by the Premier about Cayman not having sufficient human capital for reinsurance companies “rings hollow as much of the human capital is mobile –– precisely the point the IB community and their advocates have been making. The fact that Cayman lacks the local expertise may be seen as a good thing by the industry because work permits for any position requiring experience will surely be a rubber stamp.”
Sounds like the Caymans are playing hard ball.