LOCAL business leaders have weighed in on the ramifications for the island's insurance industry following Barack Obama's election win this week, urging Bermuda not to be "complacent" about our future.

Shadow Finance Minister and Bermuda Asset Management chairman Bob Richards and Association of Bermuda International Companies (ABIC) president David Ezekiel both spoke to the Mid-Ocean News shortly after Obama's historic victory, detailing their predictions for the island's economic future as the US ushers in a new era.

While Mr. Ezekiel is confident in the ability of those lobbying on behalf of Bermuda's insurance industry to state our case, Mr. Richards is concerned we've put ourselves in the "crosshairs" of the US Government and tax authorities by failing to rid ourselves of our 'tax haven' tag.

Mr. Richards warned that President-elect Obama's campaign platform to eliminate tax loopholes that favour jurisdictions such as Bermuda should not be taken lightly.

"I don't think they're empty promises," he said. "We cannot operate on some notion that it is empty rhetoric that will come to nothing. We'd be stupid to consider it to be an empty promise. We need to make a plan to meet an identified threat."

Mr. Richards believes it essential that Bermuda's insurance industry starts planning a large-scale lobbying effort in Washington, DC ¿ but not before ensuring the international business sector is on our side. He sees the issue of term limits on expat workers as critical to stating our case, lest more companies move their headquarters to Switzerland or elsewhere, as ACE Ltd recently did.

"First of all, irrespective of Obama's presidency, we have our own problems with 'Made in Bermuda' stamps on them to sort out," he said.

"There is no point trying to make a case to the US Government if the industry here is not totally satisfied and comfortable with Bermuda in the first place. We've had defections to Switzerland that are nothing to do with Obama!"

"The industry here has been unsettled over the past few years. The industry, with all its considerable resources, is not going to fully co-operate with the Bermuda Government if it is not convinced it will stay in Bermuda.

"The intellectual capital in Bermuda has risen over the last few decades. But term limits threaten this intellectual capital. This is something we can identify as a threat. It is unsettling. We have to clean up our act here before we sally forth across to Washington, DC."

Mr. Richards sees Bermuda's stance on its 'tax haven' tag as hypocritical. While we claim not to tolerate corporate inversions, we still allow companies to headquarter in Bermuda solely for tax reasons. He urges the Government and international business sector to stop this if we are serious about stating our case to the new administration and Congress.

"We have to publicly state that we will not approve corporate inversions in Bermuda," he said.

"We will not have parent companies in Bermuda with subsidiaries in the US for tax reasons. We need to stop that. It has put us in the crosshairs of the US Government and tax authorities.

"We're busy bleating that we're not a tax haven, and that is the essence of a tax haven! We have to say so publicly when we make our submission to Congress. We can show we're not here to siphon off tax dollars. We have put a red flag in front of a bull."

While he believes Bermuda has a "good case to make" to the new administration, he sees the island's lobbying effort as an uphill battle, likening our insurance industry facing the US Government to "a mouse trying to battle an elephant". He urges the Bermuda delegation to Washington, DC to prepare for a "worst-case scenario" as a result.

"We have a good case to make in the US," he said.

"We should use all our resources to make that case. The new administration has a laundry list of pressing challenges. I'm hopeful that the insurance issue will be far down the list, but what if it isn't?

"We need to base our plans on the worst-case scenario. The Bermuda delegation needs Plan B scenarios marked out clearly. What if we say we won't do corporate inversions, and we say that Bermuda insurance keeps the US insurance rate down, but that's not good enough? We need to go in with a clear plan to negotiate a settlement. What do we have to give up not to have the elephant put its left foot on us?"

Mr. Richards worries that the Bermuda Government's relationship with the international business sector is currently weaker than in previous years. He explains that our insurance industry is far more influential in the corridors of US power than the Bermuda Government ¿ a point the current powers that be on the island must bear in mind.

"We've had this great relationship, but times are tough in the US, and people are looking for results," he said.

"We can't be a scapegoat. We need to co-operate, and offer some concessions so we can continue to have this vital industry here. It starts with the industry in Bermuda getting on board. I can tell you, the iron-clad commitment to Bermuda that once was, is no more.

"You can't go into battle with your troops not fully committed. We need to make the case well and clearly. We need to be together and be strong. It's vital everyone here on this little dot is in sync. The insurance industry has more power in the US than the Bermuda Government. The insurance industry has started to waver. We need to get them solid first."

ABIC president and long-time Bermuda business leader Mr. Ezekiel is more optimistic about Bermuda's economic future under Obama's leadership in the US.

"We shouldn't be worried," he said.

"We need to be alert but there is no need to get carried away with worry on this. There are a lot of good reasons why the Bermuda market exists. One is tax, but it an increasingly small reason people are here compared to 20 years ago. It is one factor, and no one factor will swing it."

Mr. Ezekiel believes the speed at which companies can incorporate in Bermuda, free from the red tape in existence elsewhere, remains a key selling point.

"There are massive benefits for reinsurance and insurance companies to be here, other than tax breaks," he said.

"Even if one gets to a stage where tax benefits are lessened or eliminated, there are a ton of reasons why we exist. The main reason is an infrastructure and regulatory environment helping companies function more efficiently.

"Bermuda is light years ahead of the US and UK in terms of bringing companies to market. If there's a vacuum in the industry and someone wants to take advantage and start a new company with new capital, the speed to market in Bermuda is so fast because of our very high level regulation.

"It is weeks, months and in some cases years quicker than in the US or UK. There is a huge challenge in speed to market in other jurisdictions, whereas these challenges are reduced or eliminated in the Bermuda market."

Mr. Ezekiel reminded concerned Bermudians that those lobbying on behalf of our business sector still "have the ear of the people who matter in Washington, DC".

"Even when it comes to tax breaks, political rhetoric is one thing," he said.

"When people listen to the pros and cons, and understand the importance of the Bermuda insurance market to the US consumer, it is not a one-way street. They need us. We are a very integral, important part of that market.

"We can't get sanguine about the challenges we face. But we've got people representing us in the US, including ABIR and ABIC ¿ people on the ground stating our case.

"The rhetoric fades when we put our case forward. There is no reason to get complacent; Obama has an obligation to follow up on his campaign promises.

"But in the past, for instance during the Clinton administration, we were successful in getting our story across. We've learned lessons, and there is access provided to decision makers. Bermuda has built up a relationship with people who make a difference. We have the ear of the people who matter in Washington, DC and to a greater extent than ever before."

Mr. Ezekiel sees the Obama White House as fundamentally positive for Bermuda ¿ not least due to the President-elect's mandate to tackle the US economy.

"We can't lose sight of the fact that what's good for the US is good for us," he said.

"If we have a president with a strong mandate who emboldens people and gets the economy going, it is only going to work to our advantage. We should be much more concerned with broader aspects of the win. If a new president brings stability to the financial markets, it works for us."