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Bermuda's Leaders Part II - Service Providers & ILS Specialists 2016

What will be the main areas of growth for the Island’s risk transfer market? Growth will be driven by emerging market development and new risks associated with technological change. Many of tomorrow’s economies come with significant natural catastrophe exposure and are currently massively underinsured. This is a huge opportunity for the insurance sector. Technological change will also increasingly drive demand. The cyber market is in its infancy and hasn’t been tested yet. That’s before we even get to the internet of things, self-driving cars, drone deliveries, robot helpdesks, etc. What are the main challenges you see ahead? While ‘alternative’ capital is now an established part of the reinsurance market many of the structures being used are new. Fundamentally, the securities crisis of 2008 was caused by an agency issue between those sourcing the risk and those who ended up owning it. Aligned interests, transparency and investor understanding will be crucial to maintaining a functioning market through an active loss period. Generally benign loss activity since the rapid expansion of third party capital means the market has undergone a long period of evolution without a significant stress being applied. The breadth and depth of alternative capital penetration continues to expand. As it does, the chance of unexpected and unaligned losses increases. There’s a trend towards getting ‘closer to the risk’ but direct insurance is about much more than the mere provision of risk capital. Risk management expertise and claims handling ability are equally, if not more, valuable to the client. Traditional insurance companies integrate all these functions under the same roof and all parties benefit from their doing so. As third party capital drifts into direct insurance there is a danger that a less aligned supply chain, with most services delegated or outsourced, fails to deliver and ultimately leads to increased claim costs. BERMUDA’S LEADERS PART II Charlie Griffiths is an actuary with 15 years in-house and consulting experience in the London Market. Previously he was chief actuary at Whittington Capital Management (WCM, since renamed Asta), a Lloyd’s managing agency. At WCM he successfully oversaw the closure of Lloyd’s largest run off syndicate at a saving to the central fund of over £100 million and consulted on the business plans of new syndicate applications while building WCM’s internal capital model, implementing a new streamlined reserving process and preparing the agency and its syndicates for Solvency II. Previously he held actuarial roles at Navigators, Wellington and Dion Durrell & Associates. He sits on the boards of Mercury Capital, Mercury Re and Mercury Investment Fund. Do you believe Bermuda will remain a risk transfer hub? I believe Bermuda’s position as a risk transfer hub is pretty secure. The Island benefits from its strong but nimble regulation, its time zone and its language as well as the concentration of business already established there. Being the incumbent shouldn’t be taken for granted but it certainly helps. Solvency II equivalence was a significant step and there seemed to be much less flap around achieving it than existed in the London Market. How do you anticipate Bermuda will continue to adapt and evolve? There’s been an explosion in business models over the last few years. Be it cat bonds, sidecars, aligned funds, independent funds, hybrid models with independent underwriting or hybrid with tied risk cession Bermuda has been at the centre of the evolution. I see no reason that this should change now. “There’s a trend towards getting ‘closer to the risk’ but direct insurance is about much more than the mere provision of risk capital.” Charlie Griffiths Job title: Chief executive officer Company: Mercury Capital 31 2016 Bermuda:Re/insurance+ILS


Bermuda's Leaders Part II - Service Providers & ILS Specialists 2016
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