Bermuda is the jurisdiction of choice for re/insurers, but the industry faces challenges from governments around the world anxious to keep the business and capital at home.The comments were made at the Bermuda Captive Conference, where panellists representing Bermuda’s international business interests focused on the need to argue vigorously for a free global re/insurance market.Lawrence Bird, President of the Bermuda Insurance Managers Association moderated the panel which included Craig Swan, managing director of supervision for the Bermuda Monetary Authority, Stephen Catlin, chief executive and deputy chairman of the Catlin Group Limited, Brad Kading, President and executive director of ABIR, and the Finance Minister ET (Bob) Richards.Mr Swan described it like this: “Bermuda is like Facebook — every key person is on Facebook — likewise in the Bermuda market, all the important players are here.”The Finance Minister had begun the round-table discussion with an overview of the global economy, and pointing to Europe, stated: “There-in lies the problem — Europe is still in the throes of recovery.” He had talks in Brussels last week, which he attended along with Mr Kading and Mr Catlin, who also were on yesterday’s panel.He described the “freewheeling” capitalist approach that exists in other parts of the world such as North America, noting that was “rare” in Europe. “Regulators have had the sway,” he said.“In Brussels, if it moves, they regulate,” he said to laughter. “Because of that philosophy and because of the difficulty of the union of 28 countries, a lot of the world’s current economic stresses are European based. And in Bermuda we have been caught between the two forces.”In reference to a summons by the UK’s Prime Minister to a meeting in London on the subject of tax, he added: “It has made it interesting for us in Government in last two weeks.”Nonetheless, the Finance Minister described himself as bullish on the world economy. “The US and Chinese economies are improving. Europe will stumble out of this recession,” he said. “I’m not hugely bullish, but I am bullish on growth going forward.”Mr Kading reminded the audience of 2011, the year of the Japanese earthquake and tsunami, where global catastrophes had resulted in a record $100 billion in catastrophe losses.Of that $100 billion in losses, Bermuda bore just $10 billion.He pointed out that if the major catastrophes of that year had occurred in the US, Bermuda would have footed 40 percent of the bill, and if that had happened in Europe it would be been 25 to 35 percent of the bill.“It reflects the growth opportunities in the Asian markets. There will be great opportunities in Asia and the Far East,” he said.The Finance Minister agreed with Mr Kading. “There are huge opportunities in the Far East. And we have a history of taking opportunities.” In the aftermath of Hong Kong returning to Chinese rule, he said: “Most companies on the Hong Kong stock exchange had some sort of the presence in Bermuda.He said there are other opportunities. “Some are Bermuda acting as bridging between the Far East and North America, as Bermuda acts as bridging between Europe and North America — as Bermuda serves as a bridge between the US and the UK, for instance.”However, there are signs of protectionism coming out of Asia and the Far East. “That is of concern to us — there are reasons why risk should be spread around the world,” he said. Protectionism “will have the effect of limiting our ability to service these markets as they emerge.”Another threat to the Bermuda market is the move towards convergence. Mr Kading acknowledged the rise of convergence, and said: “Bermuda is a natural place for that market. Mr Catlin said the topic had been debated during a recent reinsurers meeting and the question was posed as to why a person requiring insurance would not buy instruments such as these. He said that reinsurers offer a relationship, which convergence instruments do not. It was the relationship with the reinsurer that aided the Japanese through the difficult period of 2011, he said.“We don’t see it as a threat — it’s a different part of doing business.”Low interest rates were cited as a further issue that the industry needs to contend with, as casualty business is written five to 10 years out. “I don’t know many people who say interest rates aren’t going up in the next few years,” he said. The cure for the current recession is to increase the money supply, and inflation will follow. “And we’ll inflate our way out of it.”He was supported by the Finance Minister, who said: “The Fed is trying its very best to create some inflation. We’ve come to the conclusion that no one likes inflation, but deflation is a whole lot worse than inflation. I think we will inflate ourselves out of the problem.”He added: “Bond markets are going to start putting interest rates up — in the next two to three years we will see higher rates than we see now.”The final threat discussed by the panel is the US Government’s Neal Menendez Bill, which has been introduced for passage, and is designed to keep insurance company profits made in the US, onshore.Mr Kading said: “The bill is alive, and in the President’s budget. It is a threat, as a revenue raiser that gets thrown into tax reform.”He said: “(Insurance) groups around the country are saying it’s a terrible policy proposal.” Retaining a free global market means risk is pooled globally and the market is competitive. “It’s a good thing for the US insurance market — extra capital is injected into the area of the catastrophe.“It’s a message that has to be constantly reinvigorated. Events like Hurricane Sandy — some 48 percent of those claims were paid by non-US companies. And three billion came from Bermuda companies.”