Bermuda's new insurance regulations may eliminate some state regulators' concerns about Bermuda as an offshore jurisdiction, a top US insurance regulator said yesterday.

But Arkansas state insurance commissioner Mr. Lee Douglas told a Bermuda Insurance Symposium seminar on global regulatory trends yesterday that most state regulators in the National Association of Insurance Commissioners (NAIC) still view offshore insurance markets in a negative light.

"Most of them, unfortunately, view the offshore market with some scepticism,'' said the NAIC vice president. "They fear secrecy laws, where they would not be able to get information they need about companies.

"The new regulations in Bermuda will alleviate some of the fears. But people don't want to hear that claims are not being paid because we (US state regulators) have not been able to get information from an offshore jurisdiction.'' Mr. Douglas also predicted improved solvency in the US in the Regulators' concerns balance of the 1990s.

Insurance regulators from different jurisdictions mulled over issues they face and the future of the regulatory process during the panel discussion.

Moderator Sen. Lynda Milligan-Whyte, senior partner in Milligan-Whyte & Smith, raised the solvency issue.

"The current crisis at Lloyd's has reminded us that the insurance and reinsurance business is about risk -- not just profits,'' she said. "The strain on many companies as a result of natural disasters, pollution exposures etc. has demanded that we carefully examine the financial soundness and regulatory underpinnings of risk bearing entities.'' Mr. Alan Levin, managing director of Standard & Poor's Insurance Rating Services, said the test of any regulation comes when an insurer begins to get into trouble, especially when there is pressure being brought by the public and the Press to protect the policyholders.

He said solvency standards of the past tended to fail in a crisis because they had alarm thresholds that were traditionally set too low. They were also too simplistic in an age where companies were becoming more and more complex in the structure of their business and the risks they handled.

He advocated a risk-based capital standard, which would give regulators a better opportunity to intervene for positive effect before a company had suffered irreversible damage.

He agreed that too often regulators tended to "circle the wagons'' when there was trouble, instead of keeping the lines of communication open with their counterparts in other jurisdictions.

Mr. Levin said some regulators had waited too late to intervene in a company crisis, but it was only because they were trying to avoid creating additional problems by causing a "run on the bank'' syndrome.

He said: "Regulators tend to err on the side of conservatism. Mistakes were made, but in a crisis, it is often difficult to decide when to intervene.'' Mr. Levin said he was surprised by the slowdown in recent years in the rate of insurance company failures, but he predicted that over the next few years, current problems being experienced in the industry will really "come home to roost''.

Bermuda's outgoing Registrar of Companies Mr. Malcolm Butterfield said Bermuda will continue to grow, as new challenges emerge in risk management and companies make full use of their captives.

"Bermuda sees its challenges,'' he said, "and we have the talent, ability and now the regulations we need.'' Mr. Jonathan Spencer, the head of the insurance division of the Department of Trade and Industry in the UK said that the bulk of the Lloyd's capital will become institutional or corporate capital.

He said there will be a nagging question of how capital requirements will be assessed for different financial institutions.

And with the combined European market still emerging, there was going to be a move towards more regulations for reinsurers, as there had always been in the US and UK.

He agreed that there will be more cooperation amongst regulators around the world.