Bermuda's politicians need to ensure they don't kill the "golden goose" of Bermuda's insurance industry.

That was the warning from panellists speaking at a session on the relationship between Bermuda and London insurers at The Bermuda Reinsurance Club held at the Fairmont Hamilton Princess yesterday.

The panel, which comprised Charles Dupplin, CEO of Hiscox Bermuda, Paul Markey, chairman of Aon Benfield Bermuda, and Matt Mosher, senior vice-president of ratings at AM Best Co., raised concerns over the state of politics on the Island and its heightened risk to business.

They also contemplated the very real threat of higher taxation from US President Barack Obama's administration, including the Neal bill, introduced by Representative Richard Neal (Democrat, Massachusetts), which seeks to close the loophole that allows foreign insurance groups with US subsidiaries to cut their US tax bill by ceding premiums back to their non-US parents in the form of reinsurance.

"The only clouds I can see on the horizon are either the politics - it is the case that there is a political risk in Bermuda, which, if it gets higher could harm business - or the tax-hungry larger nations who maybe have the perception that Bermuda is playing the tax game," Mr. Dupplin said.

Mr. Mosher said it was important for Government to continue to understand the impact of the insurance industry on the country and to work with the sector and appreciated that while they had to meet their needs, had to be careful not to get to the point of killing the "golden goose".

The panel discussed "Bermuda versus London" and how the two markets were working together.

Mr. Dupplin said he thought there was not necessarily a strong rivalry between the two, but rather a number of issues an insurer needed to consider when setting up in either, such as tax, regulation and the opportunity available, as well as the type of business it was seeking.

Mr. Mosher said that while there were several advantages to both markets, like the licensing in London, they also seemed to operate in synergy with one another.

"Overall, I look at the companies that are here in Bermuda or London and they all seem to have operations in both markets, so there is clearly a synergy between them," he said.

"Clearly there is a reason they are coming to Bermuda because it offers a value to them, but being in London also allows them to access markets in other parts of the world."

Mr. Dupplin said that the rate of regulation had increased in Bermuda as it strives to meet Solvency II equivalence, while from a taxation point of view, capital could continue to flow easily in the absence of a Neal Bill or similar type of legislation.