Supply and demand instability is biggest risk to ILS on Bermuda
A report by the Bermuda Business Development Agency (BDA) has identified five opportunities for growth in the domicile’s participation in the global insurance-linked securities (ILS) market.
The report, entitled ‘leading the way: Bermuda’s ILS market 2016’ shows that market participants are optimistic about the future of the ILS market on Bermuda, with an average of four out of five participants saying that the future is positive.
The report said that the biggest opportunity will be around developing new products that can be accessed by ILS funds. The biggest risk was thought to be instability of supply/demand in the market.
The report said that the top-five opportunities for growth in the global ILS market are: new products, new territories, disruptive innovation, post-event performance and investment performance.
Respondents to the survey were optimistic about the ILS market on Bermuda. When asked how optimistic they are, they gave an average score of 3.9 out of five to the question ‘How optimistic are you about the future of Bermuda’s ILS market?’
“All but one respondent ranked Bermuda as their number-one location. Insurance-linked managers ranked London and Zurich in joint second place while service providers said that Cayman and the US were the next best locations,” the report said.
According to the report, ‘maintaining a cost-effective and efficient platform’ was identified as the number-one priority for respondents.
The report showed that there were six ways that Bermuda has maintained its ILS leadership: cost-competitive speed to the market, stable, sophisticated political environment, globally-respected regulation, world-class talent, tax efficiency and accessible location and time zone.