He said policyholders who put in the capital were not driven by tax issues, but rather it was a speed-to-market question and Bermuda was picked because of 50 state regulations. "It was a regulatory aspect to it that trumped anything else," he said, adding that while there was a benefit in the tax structure, "that wasn't the initial motivation."

Lord Peter Levene, chairman of Lloyd's, said that while the industry has become largely globalized and through the European Union regulatory requirements of Solvency II is being brought in to one standard, "everyone seems to forget there is another huge issue here that is totally non-globalized, which is tax."

He explained, "So you're running an industry, in which everyone should play by the same rules with regulation, and by the way how much tax should you pay? That really doesn't make sense and that's a problem, because you're then getting companies making otherwise illogical business decisions, simply because they're going to pay less tax by doing that."

He said that companies "are moving their management somewhere that it doesn't need to be, logically, but because by doing that, they can pay less tax."

This is an issue, he said, that "needs to be addressed and I think the problem with all of this is the politics. Politicians running campaigns may not be concerned with the facts regarding the insurance industry."

He noted, however, that there are no easy answers. Taxation, he said, is a "huge gap and I don't think anybody has yet come out with a sensible way of dealing with it. Because what is a fair rate of tax?" he asked. You can justify any number you come up with, he suggested.

If one country, say the United States, raises taxes, ultimately the consumer must pay, said Stefan Lippe, CEO of Swiss Re Company Ltd. "This is the discussion we should drive," he said. "You have to talk a different language and say it will be more expensive for your voters." The voters, he added, are "the general assembly of the politicians."

Economically in many cases, he said, it makes sense having capital come from the outside to support the industry--even in the United States. If you look at the major events, such as the World Trade Center and Hurricane Katrina, Mr. Lippe observed, "More than 50 percent were paid out of the U.S."

He pointed out that "where we tried in the U.S. to take subsidized schemes in flood, they still sit on a $116 billion net loss they would like now to bring to the capital market. But how can you bring a loss to the market? It's a joke. So they have to get this money from taxpayers again."

Mr. Currie asked about the proper role of government.

Lord Levene remarked, "Who is the U.S. government regulator? There isn't one--it's difficult to answer that question."

He noted that the debate going on at the moment is that "if the U.S. is concerned about Solvency II, who is your spokesperson? And so I think the government should get involved, particularly because it's a globalized industry."

"You have international negotiations and the U.S., which is the industry, doesn't have anyone to speak for it. That's the first thing to deal with," he said.

Mr. Duperreault observed there is plenty of capital for Florida risks, but that capital wants to be paid too much, so prices are suppressed through a government scheme.

"When I started in the business, solvency was secondary to price fairness, and that shifted to more free market--open rating where everything had to be filed," he said. "More and more classes of business opened up so there would be competitive pricing and there wouldn't be government control of pricing. Now that's coming back, it's coming back in an indirect way."

He said government schemes that are underpriced are set up, effectively nationalizing business.

The debate in health care, he added, is "very similar, where the federal government is talking about imposing limitations on pricing, but not taking over the regulation totally. So they're leaving the states to the solvency side and they're only going to do pricing." He noted, however, that "if you just do pricing, it puts the states in a very difficult situation, because they lose one of the balancing acts of price and solvency."

Edmund F. Kelly, chairman, president and CEO of Liberty Mutual Group, said the role of government is "not to create moral hazard. The flood program started on a very good basis."

He said the flood program originally was designed to help those with limited means to move to a safer place after an event.

Mr. Currie asked the panel what they see happening in the next 10 years in the role of the intermediary.

Mr. Duperreault noted that when he first arrived at Marsh & McLennan, he was shown many innovations by the staff of Guy Carpenter, such as technical modeling--things he said he wasn't aware of when buying reinsurance as head of ACE.

"What's happened is that [lately] the intermediary has been required to do more and more in servicing to justify their existence with the buyer," he said. "So they have to put more money into technical things, such as actuarial and analysis."

This leads the way, he noted, to a "have and have-not situation, where if the intermediary can't keep up with the demands of the product, they may be marginalized and you're forcing concentration in a few players who have all the tools the buyer is requiring."

He warned that "what's happening is that for the same price, you'd better do more."