The next six months could be crucial in deciding Bermuda's fate in the face of regulatory threats from the US, according to Bridget Gainer, director of government affairs at Aon Corporation.

Ms Gainer, who was speaking on a panel with Christopher Lovino, managing director of Aon Global Risk Consulting, on 'Regulatory threats — fact or fiction?', which was moderated by Philip Barnes, managing director of Aon Insurance Managers (Bermuda) Ltd., at the Bermuda Captive Conference held at The Fairmont Southampton yesterday, discussed the various legislative bills in the offing and their potential impact on the Island.

The Neal Bill for the Introduction of Reinsurance Tax Legislation, which was introduced in the US House of Representatives by Congressman Richard Neal (Democrat, Massachusetts) in September last year, is set to go before Congress next month, she revealed.

The debate ranged from the current political and regulatory climate in the new US President Barack Obama's administration to the focus on current threats, such as the economic market and its effect on businesses, looming for Bermuda and its rival offshore captive domiciles from international regulators and government agencies.

Other subjects considered included ways of thinking in risk management and its impact on operating costs in the context of today's financial turmoil, and opportunities to manage costs effectively and provide true return on investment.

Ms Gainer kicked-off the topic by looking at the drivers behind the regulatory threats, from the timing of the election of a new President to the big hitters in the offshore debate, including the members of the administration, the key bill writers Congressman Neal and Senator Carl Levin (Democrat, Michigan) and drivers of tax legislation Senators Max Baucus (Democrat, Montana) and Chuck Grassley (Republican, Iowa) and Representative Charles Rangel (Democrat, New York) from US Congress, and non-governmental think tanks and the insurance industry.

"It is important to note that while multiple things happen in time, nothing is going to pass until it goes through the whole process," she said.

"But these big players will influence what happens in the next six months to one year."

She said Obama's administration was currently busy with dealing with the economic crisis, health care and energy issues, but also needed to raise additional revenue and make spending cuts, and could look to closing loopholes in its tax system. Over the past two years, regulatory risk has moved from the sixth biggest concern in Aon's Global Risk Management Survey to number two, said Ms Gainer.

She added that proposed tax legislation also featured highly on the list of US politicians, with Obama's administration issuing a 'green book' on the matter in his budget in May, including some proposals introduced in Congress, and a major tax overhaul memo mooted for release in December.

Ms Gainer went on to point out the motivation behind the Neal Bill to prevent tax avoidance and said that according to his office it could be introduced as early as July.

"The idea is that there is a perception that somebody is trying to get around the rules and trying to do some funny business to get around US tax," she said.

"But Representative Neal has yet to get a co-sponsor to this bill and although there is a list of companies in support of it, there is a similar list on the other side opposed to this."

She then outlined Sen Levin's Stop Tax Haven Abuse Act, along similar lines of suspicion that tax dodgers were using offshore jurisdictions to avoid the burden, which featured a list of 34 'Offshore Secrecy Jurisdictions', including Bermuda.

"As we get into September and October, we will see how these things firm up, whether they get Congress support and then we will look at this December 4 memo," she said.

"I think that there will be a lot that we will learn in the next six months, but I think these things are always difficult to pull off."