Hamilton, Bermuda has raised such a ruckus in the Massachusetts state legislature that future companies wishing to redomesticate may face considerably more red tape.

The State legislature's House post-Audit & Oversight (HPAO) bureau found that the process by which state insurance regulators' considered the EMLICO application to move to Bermuda was "shoddy and unprofessional''.

The Bureau added: "DOI failed to address most of the important issues raised and, in fact, approved the entire application with uncharacteristic haste.'' Recommendations from the HPAO bureau include that legislation be enacted requiring a hearing with sworn testimony before any redomestication is approved.

The bureau also recommended significant improvements to the Division of Insurance, to create "a more effective , efficient, and responsive Division''.

It also recommended the adoption of all recommendations of its June preliminary report regarding the EMLICO transaction.

The interim report said the method was "a deficient process'' by which the DOI determined statutory authorisation allowing EMLICO to move to Bermuda as another "state''.

In notes to the report, the bureau stated: "The division, upon deciding to entertain the application to redomesticate, viewed the burden of proving statutory authorisation to be solely on the company.

"The bureau's review indicated that the division in large part took EMLICO's lawyers' memo at face value. No opinion was sought from the Attorney General.

"The bureau's review of legislative committee documents indicated the provision was based on the Model Act. The commissioner's interpretation of "state'' in the context of the Model Act is inconsistent with the apparent intent of many of its provisions.'' EMLICO's policyholder (and parent company), General Electric Co. (GE) is estimated to be facing exposures of more than a $1 billion as a result of 700 toxic waste dump sites around the US, the report said.

During an exhaustive review of the DOI's handling of the EMLICO application to redomesticate, the bureau also heard allegations in testimony that the political office of then Massachusetts Governor, William Weld, had sought to discourage the commissioner from pursuing the Bermuda-domiciled EMLICO, with a view toward hauling it back to Massachusetts.