ABIR’s Earth Day message: Bermuda can lead the world in climate risk finance

Bermuda can be the world leader in climate risk finance, according to John Huff, president and chief executive officer of the Association of Bermuda Insurers and Reinsurers (ABIR).

In a note to celebrate Earth Day on April 22, 2021, Huff stressed the importance of climate risk for ABIR member companies. “Every day is Earth Day in the re/insurance industry,” he said.

Huff reserved particular praise for the role Bermuda’s regulator, the Bermuda Monetary Authority, has played in creating an environment in which the industry can innovate and tackle the challenges of climate change. The BMA’s climate sandbox, he argued, will enhance Bermuda’s ability to innovate and create new climate change risk products.

BMA, and the re/insurance industry with its historic legacy of leadership in responding to global natural catastrophes, Bermuda has the foundational elements to become a leader in climate risk finance,” he said.

Huff noted that Bermuda’s re/insurers have paid nearly a quarter of a trillion dollars in claims from natural and man-made disasters in the US and European Union alone in the last 20 years.

“Underpinning this risk assessment is scientific research,” said Huff. “Because of its location, Bermuda is a ready-made climate lab, surrounded by an ocean that serves as a real-life classroom for studying the forces behind our changing climate. The Bermuda Institute of Ocean Sciences (BIOS) observes and analyses oceanographic and atmospheric conditions from a research vessel in the Sargasso Sea, which is one of the world’s most diverse open-ocean ecosystems.”

Huff also stressed Bermuda’s commitment to closing the world’s protection gap - measured at $113 billion in 2020 - with the biggest gaps found in emerging markets.

“ABIR member companies join with the Insurance Development Forum (IDF) in committing $5 billion of re/insurance capacity to developing nations by 2025,” he said.

“In addition, IDF and its affiliates are developing an accessible, open modeling platform – with Bermuda leadership – that will greatly improve predictive capabilities in some of the world’s most disaster-prone regions.”