The Government and its advisers factored in potential disasters, such as the devastating wildfires in California, when calculating expected revenues from the corporate income tax.

While the fires are estimated to equate to more than $250 billion in damages and economic losses, John Huff, the chief executive of the Association of Bermuda Insurers and Reinsurers, said the impact on the island’s reinsurance market would be “manageable”.

Outlining the Budget for 2024-25, David Burt, the Premier and Minister of Finance, said the Government should expect to receive at least $750 million a year, on average, from the new tax.

A spokeswoman for the Government told The Royal Gazette: “The Bermuda Government, along with advisers, has factored in potential disasters when estimating corporate income tax revenue and has allowed for significant headroom against the $750 million annual revenue estimate in its spend plans.

“The calculations to support the projection were based on historical data, risk assessments and economic modelling, also accounting for a tax base in an international business sector that extends beyond insurance.”

Mr Huff said the wildfires had been “devastating for families and communities in California, particularly for those who have lost homes”.

“From a financial perspective, analyst consensus remains that this is a manageable insured event. Reinsurance market claims-paying capital is ready to be deployed when triggered.

“With global non-correlated portfolios, Bermuda market reinsurers are generally well diversified with no specific concentration of risk in California.

“Non-correlated risks refer to risks around the world, ie their risks are not concentrated.

“Bermuda reinsurers might cover California wildfires, but also cover Florida hurricane risks, Midwest tornado risk, flood risks in Japan, terrorism risk in UK, etc. Abir member companies operate in nearly 150 jurisdictions.”

According to a recent Standard & Poor Global report, Piper Sandler analyst Paul Newsome said the total insured losses should be “rather manageable given the profitability and capital levels for most insurers“.

Jasper Cooper, the vice-president and senior credit officer for Moody’s Ratings, said in the report that insured losses were expected to run in the “billions of dollars given the high value of homes and businesses in the impacted areas”.

He added that commercial property losses could be significant.

AccuWeather's estimate of the total damage and economic loss from the wildfires is between $250 billion and $275 billion.