Roil Haven: official waffling on term limits leaves insurance industry executives wondering how serious Bermuda is about keeping workers. If the island lags in supplying the industry with qualified labor, there's always Cuba, once the regime of Fidel Castro passes into history

Risk & Insurance, Oct 1, 2003 by Roger Crombie

It's the $64 billion dollar question: Will Bermuda scupper its insurance industry by insisting that foreign employees leave the Island permanently after a period of employment'? In the wake of an unexpected change of government and the rise to power of Premier William Alexander Scott, the survival of the two-year old policy is suddenly in danger. This has destabilized the Bermuda offshore sector, including insurance, the dominant discipline. People are talking in apocalyptic terms. Top insurance industry executives are nervous. Were Bermuda to lose its international business industry, the island would no longer have to worry about the perceived economic overdevelopment that has Men up debate once more.

"I guess the biggest issue on everyone's minds is the issue of the work permits and how that's going to be handled, and the issue of 'key executives,' " says Michael Morrison, president and CEO of Allied World. Morrison estimates that of the 100 or so actuaries on the island, only eight or nine of them are native Bermudians. He also fears there won't be enough Bermudians to step into the senior management positions necessary to run the billion-dollar industry that insurance and reinsurance on the island has become.

"This issue has caused huge concern among ABIC." says David Ezekiel, the head of IAS Park, one of the world's largest captive managers, and chairman of the Association of Bermuda International Companies (ABIC), the association representing the approximately 350 companies that maintain a presence on the island.

He also says the international business community is going to need "a lot more certainty" about where Bermuda's new government stands in relation to term limits. While the new immigration minister has promised to do "nothing to jeopardize the continuing success of business in Bermuda," Ezekiel maintains the new leaders need to deliver on that promise soon. If not, he says, the insurance industry will "start seeing an impact much sooner than people think--and not just an impact on those who are here, but on those who are thinking of being here."

Should the economic and political winds shift against the Insurance industry, James P. Bryce, president and CEO of IPC Re Ltd., says there's nothing to stop his company from packing up and leaving town.

"I think the harsh reality is that we mean a lot to the local economy here and we're very mobile in terms of our operations." he says. Many financial services companies' assets are kept on computer disks, and there's little to stop them from leaving when governments make it hard to do business.

Morrison also says a post-Castro Cuba could be a viable alternative. "Once he dies and that whole Communist group gets out of power, there you have a huge island with plenty of space and a very well educated group of people," says Morrison.

The goodwill that normally thrives on the island, however, is expected to have reasserted itself by the time the 2004 renewal season gets started. The smart money says an agreement between Scott's Progressive Labor Party, the opposition and industry will be reached.

Five years ago, when the debate on sustainable development first surfaced, the opposition Progressive Labor Party was elected for the first time in 35 years. The party introduced term limits on work permits, and suddenly long-term stays in Bermuda were against the law. Beginning on April 1, 2001, expatriates and every new worker who came to Bermuda thereafter, were not allowed to work for more than six years, no matter how long they had lived on the island. The deadline expires in 2007.

After that, expatriates and the new workers will have to leave for a period of at least two years before working in Bermuda again. Exemptions to the term limits were allowed for "key" employees of "good corporate citizens."

Anyone considered "among the best in the world" was considered a key employee, and therefore exempt, as was anyone considered central to a company's business. Good corporate citizens turned out to be those who filed their immigration forms with clarity. Corporate chieftains of Bermuda's international companies are among the best in the world at what they do, and thus are also exempt.

Before the law took effect, the island's Department of Immigration specifically included chartered accountants, actuaries, chefs, registered nurses and technically skilled specialists in information technology. They were all on the list of those automatically considered key, to whom work permit term limits simply would not apply. The list has not barn updated since, yet it almost certainly has changed. Scott has, for example, added actuaries and underwriters to the list.

Debate Heats Up

Matters proceeded smoothly until former Premier Jennifer Smith called a general election to be held in July. In the run-up, suppressed concerns over work permit time limits rose to the surface. The opposition said it would look at the legislation, but had already agreed to its terms. The retail sector was said to be in uproar over existing delays in the issue of permits. Exempted companies also were reportedly irate.