Convergence: Bermuda and Lloyd’s collaborate

Bermuda does not know any way of developing  re/insurance except through innovation. 

And the Bermuda and Lloyd’s markets are moving from competition to complementing each other, as demonstrated by the recent memorandum of understanding signed by Lloyd’s, the Bermuda Monetary Authority and the Association of Bermuda insurers and Reinsurers. 

The agreement will see Lloyd’s bring the Lloyd’s Lab and the Lloyd’s Academy to Bermuda, in collaboration with the BMA and ABIR. 

At a panel moderated by ABIR chief executive officer John Huff, the BMA’s deputy director of insurance supervision (fintech) said Bermuda had always innovated, starting with the creation of the captive insurance industry in the 1960s right up to the present day. 

He said the BMA’s regulatory sandbox was designed to enable companies to test concepts and types of business within a regulated environment.  It was complemented by the Innovation Hub, which acted as an accelerator for new business ideas. 

“We are trying to fund an agile way to solve problems by providing a framework that allows flexibility as well as accelerating solutions – while protecting policyholders and investors. 

Alayon said he believed regulatory innovation was the missing piece between science, innovation and the attempt to monetise ideas.  

Rosie Denee, the head of innovation at Lloyd’s, said Lloyd’s was unique as it was both a market and a regulator, and encouraging innovation was an element of this dual nature. 

“Part of Lloyd’s answer has been the Lloyd’s Lab,” she said. “In interactions with the marketplace, people can see how ideas are developing,”

She said the nature of the Lab, which accepts new entrants after a competitive process, was that people were free to fail without burning up political capital. 

“We are constantly looking to remove barriers to entry for innovation,” she said, adding the fact members of the cohorts were not burning through investment capital enabled them to take risks and to collaborate.  

At the end of the process, graduates of the lab could raise support and funding. 

“You may never find the perfect solution, but if you can move the dial then that is progress,” she said.  

She said the Lab was changing the culture of the market by fostering innovation, meaning members of the market feared missing out on new ideas. 

Also taking part in the panel was Tim Temple, the elected insurance commissioner of Louisiana, who took office earlier this year as the state’s first commissioner with insurance industry experience.

Temple said he found the industry was in crisis when he took up his role, with shortages of property capacity which he attempted to redress in his first 60 days in office. 

He said his office was now looking at mitigation and trying to find ways to convince insurers to give credit to insureds who took steps to make their homes more storm and climate resilient. 

He noted that Bermuda re/insurers had paid for a lot of roofs in Louisiana after Hurricane Ida, and the new roofs, had resisted more recent hurricanes. 

“After four hurricanes in 12 months, we had 12 companies go insolvent and 24 stop writing,” he said. “We had a lot of thinly capitalised companies chased premiums below adequate levels.”

Temple said that even after the bankruptcies, customers wanted to know when prices would return to that level. 

“We need the industry to help people to understand what the price needs to be and we need to educate the legislators to pass reforms,” he said. 

“We need companies to get the right premium and we need a home on the water to build a better roof or pay the additional premium.  The protection gap is about pricing. There has got to be something the consumer can afford.” 

Temple added that Louisiana was spending $50 billion on a coastal restoration programme that would make the coastline more resilient to storms, but insurers needed to give credit for that as well. 

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