There will be a mass exodus from the UK if the regulator doesn't cut down on rules, John Jackson predicts
' Bermuda is famous for its shorts and the deadly triangle, but it could soon have a third string to its bow - an influx of insurance and reinsurance companies, and all thanks to heavy-handed UK regulation.
It is usually wise to follow the smart money, so the decision of one of the market's shrewdest operators, Robert Hiscox, to launch a $500m capitalised Bermuda reinsurer, could set a trend.
A warning from Brit chief executive Dane Douetil a few days ago that London must change or lose business to Bermuda was made within the hallowed walls of Lloyd's, so he took his message to the heart of the market.
He cited some key facts that make Bermuda more attractive - gentler regulation, saner taxes and the fact that he could operate at 25% of the cost of remaining in the UK. Shareholders love that kind of talk.
On the downside, Mike Havard of offshore consultancy CM Insight has warned that service quality levels plummet by 75% with offshore operations. No doubt it is all that sun going to the head.
But the real problem lies in the monolithic Canary Wharf building of the FSA, where there is stiff competition to see who can bundle the most trees into the largest number of directives.
If in doubt ask your nearest friendly (and frustrated) local small broker.
British bureaucrats seem to be obsessive about regulation. Take EU directives. The French interpret them nonchalantly, struggling to fill two sides of A4. Their British counterparts, on the other hand, will have an auction for the same directive: any advance on 40 pages?
So many documents have come out of the FSA that they may well be close to (or have even overtaken by) the new voluminous Encyclopaedia Britannica. It cannot be long before the FSA qualifies for the Guinness Book of Records for churning out documents.
Insurance market entrepreneurs will not put up with this over-regimentation.
For a start, they don't have to tolerate it. They have a choice. And they will exercise it. Insurance is a village, and it won't take long for those thinking of Bermuda to ask those already out there how things are going.
If the feedback is good, then market chatter could start a stampede.
Gibraltar has shown that UK insurers will be welcome with open arms, and Bermuda has the added advantage of being a good spot to do US business.
There are sound reasons to remain in the UK, but many market players may only need a nudge rather than a push.
The message for the FSA is to rein back its enthusiasm and drop some of its nit-picking regulations right in the middle of the Bermuda Triangle.
Where, hopefully, they will be lost for ever. IT