Soft pricing, low profits and political instability will represent the three main challenges for the re/insurance market in 2017, according to an online survey of the market carried out by Bermuda:Re+ILS.
Readers were given a choice of options when it came to the challenges they feel will be the most important for the market in the year ahead. These ranged from rising claims and low profitability to decreasing demand and London stealing business from Bermuda.
Some 84 percent of respondents cited soft prices as the biggest challenge. The second biggest challenge was low profitability (57.8 percent) and the third was political instability (47.3 percent).
The fourth biggest challenge was low interest rates (42 percent), with new regulatory requirements coming fifth with 31.5 percent.
The spectre of political instability has a particular pertinence on Bermuda at the moment following a series of protests over a wide range of issues, including the immigration status of the Reverend Nicholas Tweed, who is linked to the Bermuda Industrial Union (BIU) and who has been a critic of the policies of the Government of Bermuda, and plans to redevelop Bermuda’s airport.
Equally, political instability further afield represents a worry for Bermuda. The uncertainty created by the UK’s vote to leave the European Union will potentially create challenges – and maybe opportunities – on the one side of the Atlantic while Donald Trump’s election win and forthcoming presidency remains an unknown quantity for Bermuda with much depending on how his campaign promises translate into real policies.
Various commentators noted other threats. Andreas Bachofner at the Shires Partnership cited a lack of innovation, adding that today's terrorism threat is different from traditional war/terrorism in the past.
Guglielmo Callipari from Mibav Service listed the challenges as: low interest rates, soft prices, low profitability, new regulatory requirements and political instability.
Gideon Hamburger, from Harel Insurance in Israel also said that low interest rates and soft prices were the main challenges, followed by big data and new technology, new competitors and securing the right talent.
He was echoed by John Daum from Princeton Reinsurance Advisors, who listed the three main challenges as being low interest rates, soft prices and rising claims.
However, Tony Smith from Suncorp pointed to different challenges. He said that the main ones were securing the right talent, decreasing demand/a lack of growth and new regulatory requirements, before then mentioning low profitability and soft prices.
Reinsurance, Bermuda, Survey, Harel Insurance, Princeton Reinsurance Advisors, Suncorp