Opposition Shadow Finance Minister the Hon. Douglas DeCouto has raised concerns about the potential impact of government tax credits being extended to local insurance companies, including Allshores, under Bermuda’s new corporate income tax framework.
Speaking following his contribution to the Motion to Adjourn in the House of Assembly, Mr. DeCouto explained that, due to technical requirements related to the OECD’s global tax framework and Bermuda’s Corporate Income Tax regime, tax credits must be made available to all regulated insurance companies operating in Bermuda. This includes local insurers such as Allshores and CG, as well as larger international insurance firms.
According to Mr. DeCouto, Allshores could be eligible to receive approximately $21 million in tax credits funded by Bermudian taxpayers, despite not being required to pay corporate income tax because of specific technical provisions within the legislation.
“There is a technical reason why this had to happen,” Mr. DeCouto said. “The important thing is that government has known for a long time that local companies like Allshores and CG would be able to access these tax credits.”
The Opposition Finance Minister argued that while the tax credits may be unavoidable under the current framework, government failed to establish regulatory safeguards to ensure the benefits are passed on to Bermudian consumers who pay insurance premiums.
Drawing comparisons to utility regulation, Mr. DeCouto noted that Bermuda’s electricity provider is subject to oversight that ensures certain cost savings and benefits are reflected in consumer pricing. He believes a similar model should apply to insurance companies.
“In many jurisdictions, insurance companies cannot simply increase premiums whenever they choose,” he explained. “They must justify rate increases to an independent regulator. If a company receives a significant taxpayer-funded benefit, such as a $21 million tax credit, that should be taken into account before premiums are increased.”
Mr. DeCouto suggested that with stronger regulatory oversight, insurers receiving tax credits could use those funds to offset operating costs rather than passing additional expenses on to policyholders. Such an approach, he argued, would allow Bermudians to directly benefit from the taxpayer-funded credits through more stable insurance premiums.
The comments come amid ongoing public concerns over the affordability of insurance coverage, including health and property insurance, and have renewed debate over whether Bermuda’s local insurance market requires additional regulatory measures to protect consumers.
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