Bermuda's insurance industry has already suffered a blow after the collapse of energy giant Enron, but there is no additional concern about regulation, according to a leading US insurance expert.

Robert Hartwig, chief economist and vice president at the Insurance Information Institute, said that the Enron scandal had undoubtedly affected insurers in Bermuda through investments in Enron and by assurity and directors and officers' policies.

"Yes, Enron has already affected insurance companies in Bermuda," said Mr. Hartwig. "It isn't because there is any additional concern about regulatory practices in Bermuda. It is because the Island has some of the world's largest insurers that have provided insurance products and have made investments in Enron."

On Saturday, a hard-hitting Powers Report was released by the Enron special committee, which showed the creation of a web of 'off-the-books' partnerships Enron executives used to hide losses and enrich themselves.

That web unravelled with amazing speed last fall, causing Enron to file the largest bankruptcy in US history on December 2, devastating investors and destroying thousands of jobs.

Mr. Hartwig, speaking from New York to The Royal Gazette, said the ripple effect of the collapse of Enron was bound to expand the potential impact on insurance companies.

He said so far the estimated impact on insurers was $3.6 billion, with about two thirds of that being investment losses.

He added: "The largest other impact is in the assurity area and directors and officers and other coverage."

And he said that the US Securities and Exchange Commission and the Federal Reserve were investigating some corporations that had very complex organisational structures, and the insurance industry would be impacted "to the extent insurers funded partnerships" that may have been set up as a subsidiary to remove items from the balance sheet.

Mr. Hartwig added: "Insurers may have invested in those structures. I don't have any first hand information on this, but there will be an impact on assurity and directors and officers' markets.

"A number of suits have been filed in connection with companies but there will also be filings with auditors, which brings into play errors and omissions coverage or professional liability for accountants and actuaries, and there are a lot of large companies in Bermuda, and there will be the potential that they are affected."

But he said that Enron accounting practices had sounded alarm bells with the insurance companies who were now taking a harder look at multi-layered businesses they were investing in or insuring.

"The insurers were duped the same aggressive accounting practices. Insurers will be re-evaluating their underwriting criteria when it comes to complex structures."

But he added that he did not believe that the Enron collapse would affect the way that insurance companies were structured, as they were already more tightly regulated than other sectors.

"They produce data that is well detailed - above and beyond what they have to produce and their financials are more detailed than other corporations have to produce."