A large majority of insurance executives in the United Kingdombelieve that if the government does not overhaul the tax system,there will be a drop in the number of U.K.-based carriers, onetrade group's survey found.

The Association of British Insurers said a survey of 75 memberexecutives revealed that 80 percent feel the number ofU.K.-domiciled insurance companies will fall if the tax systemremains unchanged over the next five years. Fifty-two percent saidthey believe the number would fall slightly, while 29 percentwarned the fall would be dramatic.

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

Seventy-one percent of those surveyed said the corporate taxsystem is in the United Kingdom is uncompetitive.

The release of the survey results came with the publication ofthe ABI's report on: “U.K. 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 of rules for controlled foreign companies to recognizethe importance of capital to the local insurance and reinsuranceindustries by moving the bias away from returns from labor andtoward returns from capital.

o Reduction of corporate tax when fiscal conditions allow.

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, ABI said.

o The tax system should become stable and predictable.

o The link between competitiveness and personal taxes needs tobe recognized, according to ABI, which said the higher income taxrate and restriction of tax relief on the pension contributions ofhigh earners reduces the attractiveness of the United Kingdom as aplace to work for company executives.

“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.”