Bermuda's growth in the insurance industry in the last ten years are a testimony to the constructive interplay of responsible government, business professionals, and intelligent capital.

That is the view of Norman L. Rosenthal, former managing director of Morgan Stanley & Co. Inc. and founder of Norman L. Rosenthal & Associates, who also believes that Bermuda's business and regulatory climate "has attracted some of the finest talent in the worldwide insurance industry together with capital either raised or contributed by many of the leading worldwide financial services institutions''.

Mr. Rosenthal was speaking during a seminar in Cancun, Mexico hosted by Bermuda broker, Park International.

Mr. Rosenthal said that Bermuda will be able to participate in most of the favourable trends impacting the world-wide property casualty industry, including reinsurance consolidation, while avoiding many adverse developments such as chronic loss reserve strengthening and declining service standards.

Mr. Rosenthal said other jurisdictions have failed to wise up to the Bermuda success.

He said: "I fear that the social diseases that have been refined by the US legal system -- and will probably reach even further heights under a new Clinton Administration -- are more likely to be exported to other parts of the world such that Bermuda's competitive advantages will likely increase rather than diminish during the next decade.'' He thinks Bermuda will continue to take worldwide market share from London and Bermuda underwriters will be increasingly seen as the innovators, as they are already seen in property catastrophe reinsurance. Bermuda insurers and reinsurers have also developed an excellent reputation in the US equity market and among rating agencies. Investors in companies for Bermuda-based insurers and reinsurers have done well.

Bermuda, he believes, will benefit more from advances in information technology than others.

The Bermuda companies are also "flat structures engaged in handling a limited number of primarily high-ticket products'' which can "more easily adapt themselves to major technological change than the large bureaucratic insurance and reinsurance entities'' found elsewhere.

Bermuda underwriters will have significant cost efficiencies when compared to New York, London and Europe.

And as Bermuda continues to attract leading worldwide insurers, reinsurers and investment banks, its prestige as a world class insurance and reinsurance market will grow, spurring its growth as a major foreign financial services centre.

"It has certainly become more difficult to question the integrity and stature of the Bermuda market since such entities as AIG, Aon, Chubb, General Re, Goldman Sachs, Lazard, Morgan Stanley, Swiss Re and Zurich have lent their names, capital and prestige to underwriting entities in the market.'' And the economic contribution to the Island of the insurance industry has helped create a "virtuous economic cycle'' that will contribute to economic and political stability.

"A Bermuda cab driver, a member of one of the most intellectually astute groups I have ever met, once told me that when the US gets a cold, Bermuda gets pneumonia,'' he said. "I would like to believe that with the continued development of the Bermuda insurance and reinsurance industry, the saying will evolve so that when the US gets a cold, Bermuda will only get sniffles.'' Mr. Rosenthal also said that Bermuda is right to have regulators that help the industry through mutual respect and open dialogue, as opposed to those who work against it, like US state regulators who are often the leading detractors of the industry. He also said that the Bermuda government doesn't have the same fears concerning innovation that seem to permeate the psychology of regulatory officials in other countries.

But he said Bermuda has to protect the reputation it has built, because the higher up the ladder one gets, the greater the fall.

He said Bermuda responded well to the Bermuda Fire & Marine Insurance Company Ltd. situation by enacting new insurance laws "with the toughest capitalisation requirements in the world for major international underwriters''.

BUSINESS BUC