Member companies of the Association of Bermuda Insurers and Reinsurers contributed close to $900 million directly to the Bermudian economy last year — and much more indirectly.

In announcing the results of its economic impact survey, Abir said that Bermuda remained a great base for international re/insurance companies.

However, Kevin O’Donnell, Abir’s chairman, warned that further changes to payroll tax could deter companies from basing senior executives on the island — thereby dampening local employment opportunities if top managers and their teams ended up being based elsewhere in the world.

“Abir’s aggregate direct economic impact to the Bermuda economy was $886.4 million for calendar year 2016,” Abir stated, citing the results based on a survey including 23 member companies. “This is up $52 million, or 6 per cent, from 2015.

“Abir notes the indirect impact of the operations of its major global commercial insurers and reinsurers is a multiple of that nearly billion-dollar figure.”

Mr O’Donnell, who is also chief executive officer of RenaissanceRe Holdings, said: “Bermuda remains a great place from which to run a global re/insurance group.

“Our market leadership continues to build on its strengths, including specialty sector expertise and the sophisticated, fit-for purpose regulatory oversight of the BMA.

“Bermuda’s commitment to co-operation, transparency, and world-class standards have earned it favourable global recognition — from our two largest trading partners in the EU and the US. Continued diligence is required to make progress to conform to additional international tax and regulatory standards.”

Abir said employment at the surveyed companies grew over the past year. But Mr O’Donnell sounded a warning about the impact of payroll tax changes on jobs.

“Payroll tax changes can deter senior executive employment in Bermuda and we expect that any further payroll tax change will have a negative impact,” Mr O’Donnell said.

“Companies are very sensitive to these costs. Relocation of senior executives logically leads to a relocation of direct reporting teams which further dampens local employment opportunities.”

Payroll tax has become Government’s favourite tool for increasing revenues — and is by far the largest single contributor to the public coffers. In 2017-18, the Ministry of Finance projects payroll tax will generate $439 million, or 42 per cent of total revenue.

The employer’s share of payroll tax — for those with a total annual payroll of more than $1 million — has risen to a rate of 10.25 per cent, up from 8.25 per cent in 2008, representing a rate increase of more than 24 per cent for employers over the past decade.

Last year, the OBA made changes designed to make the tax more progressive, ensuring that higher earners pay more. The changes included raising the payroll tax cap to $900,000 and significantly increasing the rate for higher-income bands.

Against the backdrop of a turbulent world environment, with political upheavals, protectionist barriers and changes in tax-reporting and disclosure requirements, Abir said its “members continued to experience pressure to reduce expenses further and to maximise efficiencies around the globe”.

Key data from the 2016 survey of Abir members’ economic activity in Bermuda include:

• Travel and entertainment expenses: Abir members estimated in 2016 they spent nearly $21.5 million in Bermuda on hotels, airfare, restaurants, taxis and catering; down 18 per cent from 2015.

• Business services expenses: Abir members estimated in 2016 they spent $72.1 million in Bermuda on legal, accounting, actuarial, temporary services and other consulting services; up 12 per cent year over year.

• Charitable giving: Abir members estimated they contributed $7.5 million in 2016 to Bermudian-based charities; down 8 per cent from 2015. The decline in charitable giving coincides with membership consolidation.

• Construction, real estate and housing costs: Abir members estimated they spent $95.7 million on construction, real estate, housing, and office space in Bermuda in 2016; fairly flat over 2015’s $96 million.

• Employment: Abir members reported employing 1,621 full-time staff members in Bermuda in 2016, up 87 from 2015. Of the 2016 full-time employees reported, 1,090 are Bermudian. This is up 58 from the number reported in 2015. The term “Bermudian” includes: Bermudians, spouses of Bermudians, and permanent residence certificate holders. Abir members reported 356 employees in underwriting roles in calendar year 2016, compared to 344 in 2015: total salary and benefits compensation for employees in Bermuda was $689.7 million, up 8 per cent over 2015.

• Internships and graduate training programmes: Abir members had 57 intern jobs in Bermuda in 2016. Seven Abir members had graduate training programmes for Bermudian employees in 2016. Members reported other training and development opportunities available such as tuition reimbursement and leadership training.

• Non-Bermuda regulatory domiciles: all Abir members have licensed operating companies in Bermuda; and more than 70 per cent of the membership has their ultimate holding company in Bermuda. In addition, the top five non-Bermuda locations for Abir member operating entities were: the UK, the US, Switzerland, Ireland and Singapore.