Off to a flying start
In June the Bermuda Monetary Authority gave the green light for Ed Broking to set up its first office on the Island as it continues to build on its recent growth and success in the market.
Chris Bonard, who also in June was appointed chief executive officer of Ed in Bermuda, is keen to get off to a flying start on the Island, which he has identified as a key domicile for the company, known as Cooper Gay before its radical relaunch in 2016.
According to Bonard, the impetus that brought Ed to Bermuda goes back to the original launch of Ed Broking two-and-a-half years ago when the company announced that it was creating a global independent wholesale broker with hubs around the world.
The company had offices in London, Singapore, Dubai, and Miami prior to Ed’s launch. The network was missing Bermuda which, as Bonard points out, was an obvious place to have an office as an insurance and reinsurance broker. It’s the second largest insurance placement market in the world, the world’s largest ILS market and still the largest market for captive insurance.
“Although Ed’s customers would be agnostic about where we place our offices and business, we clearly needed to be in Bermuda,” says Bonard.
Ed’s next task is to build up and resource its new Bermuda office properly, he explains.
“Many organisations, outside of the top three or four, have generally had small operations with some of them product-specific, such as property or professional lines.
“Our goal is to be the independent broker for independent customers around the globe, and we do a great deal of business with the major independent wholesalers and retailers in the US that historically used to access the Bermuda market,” he says.
“This has reduced over the past few years given the lack of independent distribution on the Island. If you’re a US wholesaler or retailer and you decide you want access to Bermuda, you basically end up dealing with one of your competitors.
“You could say that the sale of one of our competitors on the Island has helped our ambitions to build the major global independent business here on Bermuda.”
According to Bonard, some of the carriers in the market now have up to 80 to 90 percent of their business coming from a small number of big brokers. As he points out, they are good businesses, but there is a definite need for alternative distribution on the Island and to bring new business to Bermuda.
Ed sees that as a big business opportunity for production, plus the opportunity to build an office in a major global insurance and reinsurance hub.
The challenge of tomorrow
Bonard flags up technology as one of the major current issues for the market. He points out that a lot of the changes centre around technology playing a major role, especially as the market continues to see capital getting closer to the customer.
In addition, a number of the issues that London is currently facing, such as the UK’s departure from the EU or Lloyd’s own issues, are leading to business migrating to Bermuda.
“Bermuda is a hot-bed of capital innovation, and what Premier Burt is doing in bringing technology into the fold plays very closely with our business model,” Bonard says.
“It’s a place where you can still access multi-billion dollars’ worth of capacity in the same way that you can in the London Market.”
Bermuda is geographically well located in relation to the US, so there’s obviously a heavy amount of US business, but Ed has also seen a significant amount of Latin American business come to the Island.
“Bermuda has seen a large surge of growth in the life side—there seem to be new life companies setting up here almost on a weekly basis. And then there is the captives market.
“Like London it all combines to create a market here that allows the creation of alternative products on the Island for customers, and there is a lot of capacity.
“Taking property risks as an example, you can walk into places on Bermuda, write a risk and put down a line worth half a billion dollars, making Bermuda a pretty unique place,” he says.
“Bermuda is very heavy on those kinds of excess specialty lines, very heavy in the re/insurance world, and the majority of carriers still buy reinsurance from this market.
“It’s interesting, in the wake of my move to Bermuda after being a London broker for my entire career, to see that the place is totally overrun with London brokers at the moment, all trying to tap the capital they can’t get in London,” he continues.
“You see more London brokers here than you do in Lime Street in London at the moment, so that tells you something about how buoyant the market is.”
The future is now
“Technology is where we are positioning ourselves; we’re using it to do a couple of things,” Bonard says.
“We use TradEd as our global operating platform. We have rolled out TradEd to all our offices and it is still I believe the only broker-owned platform that has been recognised by Lloyd’s, so we’re in a pretty unique position.
“TradEd uses datasets, not scanned documents. Every single slip we have uses a dataset, which gives us the dataset of every single piece of business that we see. We can use that data to work with markets, taking a very informed approach to a class of business or to entire portfolios,” he explains.
For Ed another major step will be to move into a segment of full-blown electronic trading, Bonard says. Ed is working with a couple of markets in Bermuda that like the idea of this and they can see that some of the trading technologies Ed is using will have application to the market.
Essentially, Ed is in the process of building a system where a client in the US will be able to put in a risk in their own broker system. It will then automatically show up in the underwriting system in Bermuda, and Ed will create a digital underwriting box around it for electronic trading almost immediately.
“The aim is ultimately to take costs out of the chain,” Bonard explains. “A lot of people are talking about doing that, but we are now quite advanced in doing some deals that mean we can shrink the distribution chain and move what is essentially a face-to-face broker model to a hybrid model, with at least some parts of our business on the electronic trading model.
“We like that Bermuda is very pro-insurtech. They’ve already created the regulatory sandbox. We believe the industry is moving in that direction, not replacing what we do as brokers, but allowing brokers to use technology to grow the business and do it far more efficiently.
“Technology is going to be absolutely fundamental to how we do business moving forward, not to replace brokers, but to aid brokers to do more for their clients.”