Monte Carlo Roundtable
change. He added that there are now so many
mechanisms available that allow capital to be
put to work that capital would be able to enter
the industry quickly and efficiently.
Can a hard market happen?
This led to a debate about the extent to which
this phenomenon of capital being able to
enter the industry so quickly could dampen
any possible spikes in pricing in the aftermath
of large losses—the hard market conditions
which reinsurers have always enjoyed on a
Brad Adderley, partner in the corporate
department, Appleby, asked if this could stop
true hard markets ever recurring.
“The money can come in so quickly now
compared with 15 years ago—will we ever see
“We should not forget that
we are only at the start of the
hurricane season. There could
be other events still to follow.”
a hard market created again now that capital
can be replenished so quickly?”
Mark Allitt, director, KPMG on Bermuda,
described the ability of capital to enter the
market so rapidly as being “like a tap” which
would mean the market would be better able
to rebound from big loses more efficiently and
quickly than in the past.
Kading made the point that, even if
dynamics in the industry meant that rates
could harden, policymakers in the US may not
allow that to happen. He said that the instinct
of policymakers could be to offer more support
to ensure citizens are insured, rather than to
accept rates increases after such losses.
Rhoads pointed out that this desire could
be stymied by a lack of available funds from
governments at the moment, although
Adderley added that states could use their taxraising
powers to fund such initiatives.
Greg Reisner, director, AM Best, was
asked how the ability of new capital to enter
the industry so quickly influenced the rating
agency’s outlook on the sector. He noted
that AM Best has had a negative outlook on
the reinsurance industry since 2014 due to
concerns over rate adequacy and returns.
He added that he feels Bermuda is well
capitalised to respond to big losses, but that
only time would tell whether this flow of capital
would check the cyclical nature of the market.
Ruoff brought the discussion back to the
protection gap, arguing that the industry
must explore ways of ensuring that a higher
percentage of losses are insured while also
becoming more efficient as an industry.
Arthur Wightman, territory leader and
partner for PwC Bermuda, agreed that the
industry must tackle of some its structural
challenges head on and look to tackle new risks.
He said the concentration of intellectual capital
on Bermuda made the Island ideally placed to
lead the way on this.
Allitt added that this would be a great
opportunity for the industry if it could find
ways of tackling new risks such as cyber while
leveraging some of the new technologies
entering the market through the insurtech
revolution. “But the real challenge is picking
the right technology to back,” he said. n
22 | MONTE CARLO TODAY | DAY 3: Tuesday September 12 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com