Filling the gaps in a world of proliferating risk

Bermuda’s capital and capacity have never been more coveted than they are today, says ABIR’s John Huff.

Bermuda’s property and casualty re/insurance market has been helping catastrophe-stricken communities and businesses recover for decades—and that purpose has never been more relevant than it is in today’s world of proliferating risk.

The Island’s global carriers are striving to meet rising global demand for protection against risks related to climate change, cybersecurity threats, geopolitical instability and mortgage risk, among others—areas certain to be talking points as the reinsurance community gathers in Monte Carlo.

Bermuda’s perennially strong representation at the Rendez-Vous de Septembre is testament to the market’s enduring ability to meet evolving needs. An industry-leading talent pool, innovative culture and a globally recognised regulator drives Bermuda’s leadership in efficiently matching capital with risk, with unparalleled speed to market.

The story of continuing growth is reflected by the latest data. In 2023, members of the Association of Bermuda Insurers and Reinsurers (ABIR) achieved record underwriting growth, generating some  $170 billion of gross written premium, confirmation of Bermuda’s powerhouse position in the global market. Bermuda’s capital and capacity have never been more coveted.

The home of climate risk 

Much of Bermuda’s growth in recent years has been driven by its emergence as a specialty market of choice, especially in areas such as cyber, casualty, mortgage and political risk. This expansion has been built on the foundation of more than 30 years of natural catastrophe risk leadership and innovation that today makes Bermuda a perfect fit as world’s climate risk capital.

Evidence of a warming world is growing. July was the 14th straight month of record-high global temperatures and the US National Oceanic and Atmospheric Administration has stated there is a high chance that 2024 will surpass 2023 as the planet’s hottest year on record.

Managing climate risk is close to home for Bermuda, especially when it comes to expectations for more intense and frequent storms. Many times the Island has proved its own resilience in the face of extreme weather. A case in point was a direct hit from Hurricane Ernesto in August. After battening down the hatches to ride out the storm with remarkably little major damage, the Island was open for business with the world immediately afterwards, helping others to deal with their risks.

ABIR member companies are making significant contributions to climate risk management, even beyond the coverages they provide. 

Many have developed proprietary risk models, adding to knowledge of how rising sea levels may affect storm surge damages, or how reduced rainfall may impact wildfire risk in decades to come, for example. In doing so, they help to inform effective adaptation policies, as well as guide underwriters on the pricing of risk.

Bermuda carriers have been in the front line of efforts to narrow the global protection gap. Last year, 69 percent of economic losses from natural catastrophe losses were uninsured, according to global risk adviser Aon. ABIR and its members continue to provide resources and expertise in support of the Insurance Development Forum, whose mission is to strengthen resilience to catastrophic events, especially in communities where insurance penetration is low.

Bermuda’s responsiveness in providing protection the world needs is also evident in addressing the cyber risk protection gap—estimated at around $900 billion by the Global Federation of Insurance Associations (GFIA), of which ABIR is a founding member. Ever-increasing digitisation and interconnectedness, the growth of artificial intelligence, and increasing sophistication of hackers will continue to drive demand for coverage.

Cyber is the fastest-growing segment of the market, with premiums increasing 55.7 percent in 2021, year over year, according to latest available data from the Bermuda Monetary Authority. Given ABIR members’ willingness to find solutions to complex, emerging risks, continuing strong growth in this area is likely.

Local value

The Bermuda market’s sustainability depends on continuing to deliver solutions to global risks, together with forging strong links with the community on the Island we call home.

ABIR annual surveys showing that member companies contributed $12.84 billion to the Island’s gross domestic product over the past 15 years make it clear that the re/insurance industry leads the Bermuda economy. That impact will become even greater in 2025, when Bermuda’s new Corporate Income Tax becomes effective—ABIR members are projected to be the largest  contributors.

Bermudians are benefiting directly from the market’s presence. 

ABIR members employ 2,037 people in Bermuda, and approximately 70 percent of them are Bermudians, spouses of Bermudians or permanent residency certificate holders.

We are proactive in strengthening this pipeline of local talent. For a fourth successive year, ABIR sponsored a foundational re/insurance course, free of charge to Bermuda residents, through a strategic partnership with Bermuda College and St. John’s University. This summer, ABIR members hosted a record number of 108 paid summer interns.

To remain relevant, the Bermuda market must continue to strive to provide value to the world, by pooling global risk in diversified underwriting portfolios, contributing to the stability of global insurance markets and underpinning progress. 

John Huff is chief executive officer of the Association of Bermuda Insurers and Reinsurers. To find out more about ABIR, visit abir.bm

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