Premier Burt: Bermuda always overcomes external challenges
“Supporting the risk industry is something that we do, that we do well, and are going to continue getting better at doing as time goes on.”
Those were the words of Bermuda Premier David Burt addressing delegates at the Bermuda Risk Summit, being held this week in Hamilton as the island’s first major, in-person risk event since 2019.
In his “seaside chat” with David Hart, CEO of the Bermuda Business Development Agency (BDA), Premier Burt described why Bermuda is the best place in the world to create solutions for the world’s most complex risks, including its capital efficiency, innovative spirit, culture of collaboration and technological prowess.
Holy Trinity
Burt described the relationship between the regulator, government and industry as the Holy Trinity and the reason why Bermuda continues to lead the world in risk.
The regulator and the government are responsive to the needs of the industry, he said, to make sure that Bermuda continues to be competitive, despite any external threat the industry faces.
Burt, who is Bermuda’s finance minister as well as its Premier, said the economic picture is challenging, just as it is around the world, and “uncertainty is always a risk”. But Bermuda is very fortunate, especially during the pandemic, he said, to have a “very large and successful” international business industry that is largely driven by the insurance sector.
“Bermuda’s budget has held up significantly, especially on taxes, because the international business industry has not contracted, because the international business footprint on Bermuda over the last two years has actually expanded, by 10%,” he said.
The government needs to ensure Bermuda gets its tourism sector “back up and running”. In his recent Budget statement, Burt said the international business sector is now Bermuda’s single largest employer; for first time it is ahead of the country’s hotel industry.
Grey list
Following the European Union’s (EU) Code of Conduct Group’s inclusion of Bermuda on the state of play document (Annex II), the government is committed to cooperation and compliance in relation to global tax standards. Annex II refers to the so-called ‘grey’ list of non-cooperative jurisdictions for tax purposes.
Asked about this unwelcome development, Burt said: “It’s one of those things that I would classify as unfortunate because Bermuda does have, and continues to have, a record of compliance. The real challenge is that the attacks on Bermuda’s business model are only increasing. They are looking at what we do well and continue to try and poke holes in what it is that we do. And that’s why it’s important that we remain unified from an external affairs perspective, and continue with what I said is the Holy Trinity – regulator, government and industry – making sure that we’re all on the same side, making sure that we all relay the same message.
“There’ll be the OECD, there’ll be the Code of Conduct, there’ll be all these things that come up, and Bermuda has to continue to say, what it is that we are, what it is that we aren’t, and keep up with all of these global assessments. As I said in my Budget statement, Bermuda is currently undergoing 10 global assessments – from Code of Conduct to economic substance, from cyber security to beneficial ownership; there are so many different items.”
On 18 March, Burt will be debating the Ministry of Finance budget with the shadow minister of finance. “There’s an increase in allocation there because we do have a lot of external threats that the Ministry of Finance has to deal with to continue, not to protect Bermuda’s reputation, but to make sure people understand what Bermuda is doing, and remaining at the forefront of global compliance.”
Writing Bermuda’s obituary
On the global deal agreed by 136 countries to ensure big companies pay a minimum tax rate of 15% and make it harder for them to avoid taxation, Burt reminded the audience that he had been Premier for five years and that in that time he had gained a greying beard.
Challenges he had dealt with included the so-called Paradise Papers - confidential electronic documents relating to offshore investments that were leaked to the press in 2017. Other issues had included US tax changes and economic substance requirements.
“They’ve written Bermuda’s obituary many times and Bermuda continues to succeed because of the way we work together. This is just another challenge, anther global agreement, that Bermuda will deal with, but at the heart of where Bermuda is, Bermuda wants make sure it remains the most competitive place in the world to employ capital, and the most competitive place in the world to continue to innovate in the areas of risk. And I have no doubt that working with our international business partners, especially those in the insurance industry, that whatever the OECD comes up with, when they finalise it, it’s just one of the type of stuff that we’ve dealt with before.
The worst kind of risk event
Asked for his view as a state leader on Russia’s invasion of Ukraine, and its potential impacts on Bermuda, Burt said he found it difficult to explain to his two young children why Ukrainian children were dying because of war. He referred to the “incredible geopolitical instability that creates nervousness inside your soul” because “you don’t know where’s next”.
Bermuda will continue to play a role in such times of uncertainty, to help the world address, manage and deal with risk. “That’s the beauty of Bermuda: throughout all these challenges, we continue to provide solutions to the world.”
On Ukraine, his government has had outreach from some companies to relocate to Bermuda under the Work from Bermuda programme, which was pioneered by the Minister for Economy and Labour. “As mentioned in our economic recovery plan, it will continue, and it will change the way in which we look at the way people are working and remote-working. We are looking forward to welcoming those persons, but it is tragic, and it does show the role that Bermuda does play and will continue to play in making sure that we allow companies to manage the risks which are faced because of this continued level of global uncertainty,” Burt said.
Innovate to grow
The Bermuda government and the opposition, whichever party is in power, are always united in their support for the international business sector, Burt said. On that subject, political sparring “doesn’t happen”.
As for growth in innovation, work between the government and the regulator and industry continues. “The relationships are incredibly strong, the meetings we have are frank but recognise that we all want same thing – the continued growth and success of this market and what we do in Bermuda.”
He added: “If we look over the last four to five years, we see that there has been incredible expansion growth. We’ve had our challenges - of the softer market and the mergers that took place on the cat side - but we’ve also seen growth and expansion on the long-term insurance side as well, and additional investment. You have companies like Convex and Mosaic that still shows that Bermuda is that place where investment can happen and continue to happen.”
On the innovation side, BDA’s a legal and regulatory working group “shows its mettle”, he said. “It’s a well-oiled process. The lawyers and industry meet and say what are the changes they want; the regulator says OK, they understand but need to have a consultation paper; they finalise those items and it comes to the government; bills are written and sent to the attorney general; and they are often passed into law within three to six months. We will make that process even more efficient to make sure we continue to be leaders in innovation.”
Burt will be leading Bermuda’s delegation to RIMS 2022, in San Francisco next month, which is the largest global risk management event in the world.
