Chris Bonard of Ed Broking
Bermuda takes a look at
Bermuda’s place in the financial
world—and what it can do to
cement that place still further.
Each of the world’s re/insurance hubs has an identity and
a role. London is the largest and the original. Miami is
the gateway to Latin America, as Singapore and Dubai
are to their own regions. The European and US markets
alike lack a single dominant city, but their power-players, backed
by substantial experience and capital, have extended these markets’
multiline offerings world-wide.
Meanwhile, thriving Bermuda ranks as the second-largest
reinsurance market in the world, but its pedigree is relatively short,
and it is surrounded by the Atlantic Ocean. That makes the Island’s
raison d’être more difficult to pin down, which in turn makes the
development of a broad and stable business base doubly challenging.
However, the route to a more sustainable Bermuda lies before us.
I do not ignore Bermuda’s very valuable strengths, which include
several stable and longstanding market niches. Its original purpose
as a market for excess US casualty risks, particularly directors and
officers liability (D&O), has not receded. Since then, during times of
global capacity shortages, Bermuda has grown to become a large and
extremely stable market for catastrophe risks. It is also a leader in the
business and expertise of insurance-linked securities (ILS) and other
forms of convergence capital.
In other segments, however, Bermuda has been regarded as
something of a hard-market safe haven. Middle-market property
risks, for example, have tended to reach Bermudian underwriters
only during market upcycles—as indeed they are doing now. That
business flow presents a superb opportunity for Bermudian carriers
to entrench their position in this and other classes, creating a more
sustainable market based on a more diversified pool of risks.
Major US carriers are re-underwriting their books. Lloyd’s has
taken strong action which has reined in the market’s appetite in
specific classes. European giants have cut back. Thus Bermuda has
an opportunity to achieve some of the stability of business flow
that those markets achieved long ago. If carriers here can seize the
opportunities arising from displacement, and retain the business
when current market conditions subside, the goal will be achieved.
It comes down to the distribution system that delivers business to
Bermuda, and the eco-system we put in place to meet it. Our market is
SHUTTERSTOCK / JUERGEN FAELCHLE