Providing protection in an increasingly uncertain world

Bermuda’s property and casualty re/insurers are well placed to solve the world’s largest and most complex risks, argues John Huff, CEO of ABIR. 

At this year’s Bermuda Risk Summit, a recurring theme was the accelerating rate of global change producing new types of risk and greater exposures. Climate change, cybersecurity threats, geopolitical instability, regulatory change and economic volatility are reshaping the risk environment.

For the re/insurance industry, the challenge is not only to respond to change, but to stay ahead of it. No market is better equipped to adapt to this fast-paced environment than Bermuda.

From its roots as a centre of natural catastrophe reinsurance, Bermuda has matured into a diversified re/insurance hub and specialty market of choice, offering solutions to manage just about every risk faced by communities and businesses.

Over the years, Bermuda has attracted proven industry leaders and top technical expertise, from risk modellers to actuaries and data analysts, the best minds in the business. This unique cluster of world-leading talent makes Bermuda a re/insurance innovation laboratory, a leader in staying ahead of emerging risks.

This year, a big change for the market is Bermuda’s new Corporate Income Tax (CIT). Companies generating more than €750 million in annual revenue fall within scope of the 15% tax. ABIR members are projected to be the largest payers of CIT, adding to their already sizeable positive impact on Bermuda’s domestic economy.

“The Bermuda market has the expertise and proven ability to raise risk capital needed to play a lead role in improving insurance penetration and the resilience of communities.”

The successful implementation of a CIT regime, which brings Bermuda into line with the OECD-led initiative to apply a global minimum tax on multinational companies, was the result of close collaboration between the industry and the Bermuda Government. This public-private partnership has been at the core of the market’s success over decades, and there is optimism that we will arrive at a CIT regime that benefits everyone. 

Discussions at the Summit focused on opportunities for Bermuda to reduce its cost of doing business in other areas to maintain its competitiveness and offset the added costs of the tax, and the chance for the island to create an entirely digital tax system. 

Increasing incidence of wildfires was a key topic at the Summit, and particularly the devastating Los Angeles wildfires, which destroyed more than 15,000 structures and displaced about one million people. Industry losses could be as much as $40 billion and ABIR member companies will pay out a substantial portion to fund the region’s recovery, just as they did after the succession of California wildfires in 2017-2019, when Bermuda re/insurers paid out $9.2 billion.

California Insurance Commissioner Ricardo Lara, who has seen more than 115 wildfires ravage his state during his tenure, spoke at the Summit. His presence was an acknowledgment of Bermuda’s re/insurers’ vital role in managing large global risks.

Lara explained how California is taking steps to increase the availability of insurance in California such as authorising the use of catastrophe modelling for the first time and allowing a pass-through of reinsurance costs to consumers. He told the conference: “We have to get to availability to get to affordability.”

These words reflect the reality facing global insurance markets today amid proliferating risks. ABIR advocates for open and competitive insurance markets, promoting the availability and affordability of insurance. There are many opportunities for private reinsurers to take more risk off the shoulders of subsidised, government-run insurance programmes that put taxpayers on the hook for huge potential losses in places such as California. 

ABIR members can provide coverage for similar-scale perils because they diversify their exposures by pooling global risks – from US hurricanes to Latin American earthquakes and Japanese typhoons. As climate change brings new and greater risks, Bermuda re/insurers stand ready to provide solutions.

The wildfires also illustrated how the protection gap persists, in the developed as well as the developing world. Aon estimates that economic losses from natural disasters in 2024 totalled $368 billion, of which $145 billion was covered by insurance, leaving a protection gap of 60%.

The Bermuda market has the expertise and proven ability to raise risk capital needed to play a lead role in improving insurance penetration and the resilience of communities, by working with governments and regulators to create innovative structures to cover complex risks.

Bermuda has also emerged as one of the leading markets for cyber re/insurance, generating $7.8 billion in gross written premium in 2022, or 58% of the global market in 2022, according to data from the Bermuda Monetary Authority (BMA). The cyber risk protection gap is estimated at $900 billion by the Global Federation of Insurance Associations.

In no field of risk is the rapid rate of change more apparent than cyber. At the Summit, an expert panel discussed the impact of AI in strengthening cyber attackers, while also helping defenders to detect and prevent attacks. Areas such as ransomware, data breaches and digital supply chain disruption are becoming ever greater concerns for businesses.

Bermudian re/insurers are mindful of building their own cybersecurity resilience, even as they help clients around the world to manage their cyber risk. To help further these efforts, the BMA completed a consultation on operating resilience in March. 

A new feature at the Summit was the Future Leaders Forum, designed to inform and inspire students and career-shifters, with guidance on opportunities offered by the re/insurance industry. More than 100 students gained insights on career pathways from industry professionals.

ABIR members are substantial employers of local talent, with about 70% of our 2,100-strong workforce Bermudian, spouses of Bermudians or permanent resident certificate holders. And we constantly look for efforts to strengthen the local talent pipeline through initiatives such as the free insurance foundational course sponsored by ABIR for a fifth successive year and offered in conjunction with Bermuda College and St. John’s University. 

Not only are ABIR’s members collectively the largest, private-sector employer, but they also lead Bermuda’s economy with direct, on-island economic contributions of more than $1 billion in 2023, a record high. 

The Bermuda market is ready and willing to lead in finding solutions to the world’s largest and most complex risks and play our part in supporting progress and prosperity by providing protection and peace of mind in this increasingly uncertain world.

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

For more news on Bermuda Risk Review 2025, click here.

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