FOREWORD: ABIR

A SYMBIOTIC RELATIONSHIP

There is a great deal to look forward to as the Island’s re/insurance sector helps the world manage its risks, says John Huff, chief executive officer of the Association of Bermuda Insurers & Reinsurers.

“With climate change at the heart of our business, Bermuda’s re/insurers can lead positive change.”
John Huff, ABIR

Bermuda and the re/insurance industry have a strong and enduring symbiotic relationship. Over several decades, industry, government and regulator have worked together to create an unparalleled business environment for global re/insurers and a world-class marketplace attractive to both capital and innovators.

The market forms a significant economic pillar for the island and employs hundreds of Bermudians. Indeed, Association of Bermuda Insurers & Reinsurers (ABIR) member companies alone contributed $830 million to the Island’s economy in 2019, according to ABIR’s 2020 Bermuda Economic Substance Survey.

The COVID-19 pandemic has emphasised the value of the market, to Bermuda and to a world in which a growing appreciation of risk has led to rising demand for re/insurance products.

As we look ahead towards January renewals season, the market is signalling moves towards rate adequacy and there are four Cs showing up prominently on the radar of ABIR members: capacity, catastrophes, climate, and cyber.

Extreme weather events, which are likely to increase in frequency and severity as a result of climate change, have been a feature of 2021. Hurricane Ida caused damage in 19 US states and total insured losses estimated in the tens of billions of dollars, while Europe’s insurers had their most expensive year for natural disaster claims after July’s devastating floods and June’s violent windstorms.

Drought conditions in the western US have led to another year of destructive wildfires. Once again, Bermuda’s re/insurers have been there to help pay a substantial portion of the claims and to help stricken communities recover.

With decades of experience and deep expertise in catastrophe risk, as well as an innovative drive to seek solutions to some of the world’s biggest problems, Bermuda is a natural fit as the world’s climate risk capital.

“The market has attracted a slew of startups and billions of dollars of new capacity.”

Wielding influence

ABIR members are working with governments to help structure financial mechanisms to close the protection gap, supporting adaptation and mitigation measures (for example, by signing up to the US-based Insurance Institute for Business and Home Safety’s “Principles for Climate Change Adaptation”), and using their influence as underwriters and investors to support environmentally-conscious economic activity.

Momentum for global action to confront the challenges of climate change is set to gain pace following November’s UN COP26 conference, as well as through the environmental, social and corporate governance movement that is raising expectations from investors and regulators alike for businesses to understand and mitigate their impact on the environment. With climate change at the heart of our business, Bermuda’s re/insurers can lead positive change in this direction.

Cyber risk is a rapidly growing challenge for the world, in line with our increasing reliance on technology, expanding online commerce and the ever-evolving sophistication of hackers. Reports abound of ransomware attacks and data breaches, events that can inflict substantial operational, reputational and financial damage on organisations.

ABIR member companies are at the forefront of providing capacity and innovative product structures to underwrite cyber exposures. Finding solutions to manage complex, emerging risks is what the Bermuda re/insurance market does.

Over the past couple of years, the market has attracted a slew of startups and billions of dollars of new capacity, evidence that investors continue to view Bermuda as the best place to deploy risk capital. With its internationally recognised regulation and world-class talent, there is every reason to expect that to continue.


For more information on the ABIR, visit: abir.bm


Image courtesy of Shutterstock / Martin Pelanek