A routine Accountant General stamp duty audit of insurance companies found at least two companies failed to pick up a 1992 increase.

British American Insurance Company Ltd. and Sun Life Assurance Co. of Canada have been paying wrong stamp duties on various life, accident and health insurance policies.

These two non-resident insurance undertakings (NRIUs) -- non-Bermudian companies licensed to sell insurance here -- primarily sell life insurance policies.

British American Insurance general manager Edward Figueirado said the misunderstanding is under review.

Sun Life Assurance Co. of Canada branch manager Joan Wood said she could not comment until after a meeting today at the company at which officials were to look into the matter.

Insurers are required to pay a stamp duty of $10 or $25 depending on the policy. Rates pre-1992 were $1 and $5.

Life policies worth over $20,000 carry a stamp duty of $25. Very few Bermudians buy policies under $20,000 as they are used to cover mortgages.

It is not known how much back duty is owed.

Accountant General Heather Jacobs Matthews primarily confined her comments to the legislation.

Mrs. Jacobs Matthews, who became Accountant General in Janaury 1994, said insurance companies "self-police'' themselves on paying stamp duties but a "normal part of our job is to enforce legislation'' through routine inspections.

The Accountant General said that under part ten, section 57 of the Stamp Duties Act 1976, insurance company books must be open to inspection.

The section says the Accountant General has the right to inspect insurance company records "relating to such business the inspection whereof may tend to secure any duty.'' The Accountant General also cited Head 35 of the Act which outlines the nature of the insurance instrument, how much the stamp duty is, when it has to be paid, and that the insurer is liable.

But part or all of the duty is likely passed on to the consumer through higher premium rates.

Under Head 35 of the Act, every life insurance policy issued which has a value of under $20,000 carries a stamp duty of $10. All other life policies carry a $25 stamp duty. Prior to February 19, 1992, these stamp duties, set by the Minister of Finance, were $1 and $5 respectively.

Also under Head 35, accident and health policies carry stamp duties of either $10 or $25. These also were $1 and $5 respectively prior to February 19, 1992.

BF&M Ltd. vice president, finance and accounting John Wight said that the Accountant General makes routine inspections but that BF&M has complied with its stamp duty obligations.

Colonial Insurance Company Ltd. general manager William Madeiros was surprised that neither side caught the oversight earlier.

Colonial has complied with the change, he added.

A spokesperson for the Argus Group of Companies said they did not immediately pick up the new rate but once it was noticed it was corrected.

"The moral is that if there's a change in legislation, the ramifications should be broadcast loud and clear. Bring it to the company's attention and the company will be happy to comply,'' he said.

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