The Neal bill is a threat to Bermuda’s insurance market but the market has the strength and adaptability to flourish even if US lawmakers ever pass it.That was the consensus among panellists at the Insurance Day Summit yesterday, who were discussing the proposed legislation from Massachusetts Congressman Richard Neal that would raise the tax burden on many non-US insurance groups.“It would have an impact, but we are very bullish about the Bermuda market continuing to prosper if it’s passed,” said Endurance Specialty Holdings president William Jewett.“Bermuda has a very pro-business environment, a very strong infrastructure, an established market and largest catastrophe market in the world.”Fellow panellist Kevin Kelley, chief executive officer of Bermuda insurer Ironshore, said: “The Neal bill is aimed at Bermuda and it would hurt Bermuda. The important thing is the response of the market to it. I think Bermuda has made a truly organised and thoughtful opposition to it. The thinking was that there wouldn’t be any opposition.“I think Bermuda needs to keep doing what it is doing and that’s talking up its story. Certainly, the Premier of Bermuda sees it that way.”Alterra Capital Holdings CEO Marty Becker said: “The question of the impact of the Neal bill depends on what it ends up saying, if it does get passed. The most recent version was treating all foreign reinsurers the same, so that wouldn’t be damaging to Bermuda’s relative competitiveness. However, it would increase costs.”The cost of doing business was another topic discussed on the panel entitled ‘Keeping Bermuda Competitive’ on the opening day of the two-day conference at the Fairmont Hamilton Princess.Mr Becker said that Bermuda was indeed “right up there” in terms of operational costs, even when compared to other jurisdictions that were not cheap including London, Zurich and Dublin.“In our business, operating cost is not the main driver,” Mr Becker said. “The main driver is the availability of talent.” Having the right key staff in place was “where you make your money”, he said.“It won’t change your life if your overheads are five percent less,” Mr Becker said. “Keeping a strong and vibrant talent pool here is the most important thing.”Most Bermuda commercial re/insurers had a business model which entailed a small body of people making key decisions, meaning that cost was not a major issue, Mr Jewett said.“This is an efficient market,” Mr Jewett said. “You have billions of dollars of capital and numerous markets within a five or 10-minute walk of each other. What is the price of having your key decision-makers stuck in a two or three-hour commute, as opposed to 20 minutes? The benefits of Bermuda outweigh any cost disadvantage.”On the question of the companies that have redomiciled to Europe, such as Allied World and Flagstone Re, Mr Becker said there were several reasons that a company might want to redomesticate that had nothing to do with Bermuda.“If you go to a country which has a tax treaty [with the US], it makes it easier to position your workforce in different places, particularly in the US,” Mr Becker said.Bermuda had received many threats from overseas, but it still offered many advantages to companies, he added.“If those advantages disappear, it does not take you long to redomesticate, as we’ve seen,” Mr Becker said. “Each of us is charged with making the right decision for our shareholders and if the time comes then we would do what we had to. But there is no motivation to do that at the moment.”Mr Kelley made his confidence in Bermuda clear. “We have entered into a long-term lease of our Front Street offices to back up our belief,” he said.However, Mr Kelley did have concerns about regulatory threats. Regulation that would drive up the cost of doing business and increase capital needs was “dangerous”, he said. The Bermuda Monetary Authority (BMA) is pushing for “third-country equivalence” with the new Solvency II rules for insurers being introduced in the European Union in 2013.“I think the challenge for Bermuda is to figure out a way to be a part of the European community, because of historical ties and the advantages it gains from business there, and to continue to be a meaningful solution to business problems coming out of the US,” Mr Kelley said.Moving too far toward a European regulation model could blunt Bermuda’s competitive edge and Asian jurisdictions would be well placed to take advantage, he warned.Mr Becker spoke in favour of the drive for Solvency II equivalence. “We are global companies and Bermuda needs to be found equivalent in order for us to be able to market our products around the world,” he said. “The BMA’s approach has been logical and cooperative.“Solvency II is a benefit to Bermuda companies, because these companies are already risk-driven and well capitalised. There are a lot of companies around the world who will find themselves with capital shortfalls.”