Premier Ewart Brown told an insurance industry audience yesterday that proposed US tax code changes to target non-US insurers could spark an international trade war.

Dr. Brown, who was speaking to delegates at the Insurance Day Summit at the Fairmont Hamilton Princess, was referring to a theory put forward by former US Trade Representative Mickey Cantor.

In Washington, DC, last month, Dr. Brown said the visiting delegation from Bermuda had explained to influential lawmakers that the enactment of the Neal bill — which would raise the effective tax rate for some non-US insurers — could cost US consumers $10 billion to $12 billion in higher premiums.

"Equally as startling is the potential trade war that could ensue as a result of new tax laws like the ones proposed," Dr. Brown said in a breakfast speech to open the summit.

"Former Clinton Administration Trade Rep Mickey Kantor wrote Congress recently to warn that a trade war between the US and some of its European partners could be in the offing if this kind of legislation is enacted.

"Clearly, Bermuda is not the only country on the opposing side of this new tax law proposal — so are Germany and Switzerland."

Dr. Brown added that this year's Washington visit had been different from previous occasions.

"Members wanted to talk about proposed legislation in the House and Senate that would create a new tax on reinsurance transactions between a US subsidiary insurance company and its non-US affiliate.

"Members were strikingly well-versed on this subject matter — in a way the Finance Minister and I had not seen in the past. There were many questions and the Members were very engaged.

"And to be honest with you, the level of engagement was not daunting as you might expect — instead, it was reassuring. It showed me that Members wanted to make good, well reasoned decisions and they were hungry for credible information on the subject."