NU Online News Service, Sept. 15, 3:24 p.m.EDT

A large majority of insurance executives in the United Kingdombelieve that if the government does not overhaul the tax systemthere will be a drop in the number of insurers based there, a tradegroup survey finds.

The Association of British Insurers said a survey of 75 memberexecutives found that 80 percent feel the number of U.K.-domiciledinsurance companies will fall if the tax system remains unchangedover the next five years. Fifty-two percent said they believe thenumber would fall slightly, while 29 percent said the fall would bedramatic.

In addition, the survey said that almost two-thirds of seniormanagement are tempted to move abroad because of the nation'scurrent personal tax system.

When asked how competitive they felt the corporate tax system isin the United Kingdom, 71 percent said it is uncompetitive.

The release of the survey results came with the publication ofthe ABI's report titled "UK Competitiveness: the way forward forinsurance."

ABI said that among some of the report's suggestions are:

o Introduction of a corporate tax exemption for those withbranches abroad to encourage companies to keep or set up theirheadquarters in the United Kingdom.

o Reform controlled foreign companies' rules to recognize theimportance of capital to insurance and reinsurance businesses bymoving the bias away from returns from labor and toward returnsfrom capital.

o Reduction of corporate tax when the fiscal conditionsallow.

o Require any tax changes in response to regulatory reform toresult in a stable and sustainable system. The changes should alsonot endanger the United Kingdom's competitiveness with the EuropeanUnion.

o The tax system should become stable and predictable.

o The link between competitiveness and personal tax needs to berecognized. The higher rate of income tax and restriction of taxrelief on the pension contributions of high earners reduces theattractiveness of the United Kingdom as a place to work for companyexecutives.

"The recession cannot be allowed to mask the challenge, but alsothe opportunity, the [United Kingdom] faces over competitiveness.Getting it right today could reap rich rewards tomorrow," saidStephen Haddrill, ABI's director general, in a statement.

"The [United Kingdom] cannot afford to wait for a return toeconomic health to act," he continued. "Our proposals will makesure that we can build upon an already strong U.K. insuranceindustry--one that has come through this crisis in robust shape andis a major international player."

Copies of the ABI's 24-page report are available at www.abi.org.uk.