The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Reforms switching the Bahamian insurance industry to risk-based taxation are with the Attorney General’s Office and expected to be in Parliament “shortly”, it was revealed yesterday.

Vibert Williams, the Bahamas Insurance Association’s (BIA) deputy chairman of property and casualty, said the transition from the 3 percent premium tax to a risk-based levy was bring driven by industry regulator, the Insurance Commission of The Bahamas, and the Government.

“There is in place an ongoing review and some changes being proposed to the legislation and, once that is complete, the insurance premium tax will become a premium risk levy,” Mr Williams nevertheless confirmed.

Michelle Fields, the Insurance Commission’s superintendent, explained: “What we are looking to do, with regard to the change of the premium tax to the systemic risk levy, that is at the Attorney General’s Office and we are just waiting to fine tune that. So we are expecting that to go to Parliament shortly. In fact, we expected that to have been done already.”

She also confirmed plans revealed by Tribune Business last year to merge the Domestic and External Insurance Acts into one, adding: “With regard to the merging of the legislation that, obviously, is a big project and that is on our agenda for this year. So we have the External Insurance Act and the Domestic Insurance Act and we are looking to put them together.”

The reforms contemplate replacing the existing three percent tax levied on insurance premiums with a systemic risk levy, replicating recent changes unveiled for the Bahamian bank and trust company industry, where fees are to be based on the systemic risk individual institutions pose and the amount of regulation they require.

The Bahamian insurance industry’s regulatory transformation appeared to be motivated by exactly the same thing occurring with the banking sector to ensure The Bahamas meets its pledge to the European Union (EU) to eliminate so-called “ring fencing”.

The Bahamas cannot be seen to have two separate regimes for its domestic and external (captive) insurance sectors, as this would result in “ring fencing” or the provision of preferential tax breaks for foreign investors and non-resident entities that were not available to operators in the local sector.

Anton Sealey, the BIA’s interim chairman, added: “Our industry is not unmindful of the external pressures being exerted on smaller nations and so-called ‘tax havens’, such as ours, by the larger countries in an effort to ensure that they are receiving their just dues from their citizens.

“In this regard, as an industry we are committed to assisting our government in fully complying with any treaties or protocols that we, as a nation, are signed on to to combat the illegal or exploitive use of our systems. However, this must be in line with the applicable law.”