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Bermuda Insurance Report 2012
Business Monitor International, Nov 2011, Pages: 34
Business Monitor International's Bermuda Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bermuda's insurance industry.
Bermuda is the world’s premier offshore insurance centre and it is expected to remain so for the foreseeable future. Other jurisdictions have had success in attracting international insurers or captives, but none have, over time, developed an insurance sector that is home to several of the world’s very largest and most sophisticated underwriters, an extraordinary variety of captives and a truly central position in the coverage of risk worldwide. That Bermuda has reached this position is partly the result of good luck – given its lack of income tax and close proximity to (re) insurable risks on the east coast of the US – and largely the consequence of constructive collaboration between the government, the Bermuda Monetary Authority (BMA, which is the central bank and a highly effective regulator) and the various protagonists in the insurance sector.
One consequence is that Bermuda’s extremely large insurance companies focused on third-party (re) insurance business – as opposed to companies that are substantially or totally captive insurers – are well capitalised and appear to be cope well with surges in catastrophe-related claims, such as because of the March 2011 earthquake and tsunami in Japan. These companies also appear well placed to deal with the challenges thrown up by the EU’s Solvency II regime. This is partly because the BMA’s own requirements are very demanding and partly because Bermuda’s standing as an offshore business centre is not affected by a sovereign debt crisis. The only challenge that would really shake the Bermudian insurers would be a financial markets meltdown – and even then they would be better placed than their counterparts in most other countries.
Life (re) insurance is something of a positive wildcard in an insurance sector that continues to be dominated by offshore (re) insurance and captives. Traditionally, Bermudian companies have not been in the business of manufacturing and distributing sophisticated savings products. However, the biggest players are reporting double-digit growth in their life operations. Given the trends in the Asia Pacific region and some emerging markets, this can continue. Many of the world’s leading life companies are also booking business through their Bermudian subsidiaries and will continue to do so.
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