ROUNDTABLE: ILS
Q4: WHY DOES BERMUDA REMAIN THE WORLD LEADER IN ILS? ARE THERE ANY THREATS TO THAT STATUS?
“We will continue to compete based on our experience and the support we’ve given our clients.”
Greg Wojciechowski
Wojciechowski: First and foremost is Bermuda’s geographic location. We’re placed comfortably between two of the deepest capital markets in the world and two of the largest insurance markets in the world. We also have an independent regulator that is very aware of the nuances of the business.
Second, we have the talent and experience in providing the market with bespoke insurance solutions. Our companies and clients are global so Bermuda has developed the bench to provide that experience to drive innovation. Whatever the next market shift or innovation, we are well positioned to adjust—not to mention the world-class stock exchange we have.
I like to say we are the Silicon Valley for ILS. A decade ago a lot of experienced people spent time making sure that this nascent product was well created and suited to the type of work we do here, whether it was from a regulatory perspective, an exchange perspective, or with our service providers.
Bermuda, for our clients, is tried and tested. Clients appreciate the bespoke support they get in a lot of ways. Some of our competitors are using incentive mechanisms to attract business, such as rebates for incorporation fees, but Bermuda hasn’t done that. We will continue to compete based on our experience and the support we’ve given our clients.
The BMA recently expedited the incorporation time frame for ILS vehicles to a couple of weeks but for me that is one of our competitive advantages—leveraging our knowledge and understanding of these products. We’re comfortable that we can flag something that doesn’t meet our requirements within that time frame.
We also want to help drive the market’s growth. We don’t necessarily want to consume more of the pie, we want to grow the pie.
“Bermuda is in a good spot, but there’s a lot of competition out there.”
Craig Redcliffe
Redcliffe: The idea of the Silicon Valley of ILS resonates. I would only add that there is a dual skillset needed in ILS. You need that asset management expertise, but you also need the insurance expertise, and not all jurisdictions have that capability.
Bermuda is uniquely positioned in that regard. That’s why you see a lot of ILS managers launch funds here—because Bermuda has that unique skillset.
The reporting aspect of interacting with investors, the communications with investors, in addition to all of the due diligence requirements—these are different skillsets that a traditional reinsurer typically has. These skillsets are more aligned with asset management. Bermuda is uniquely positioned when it comes to combining these two skillsets into one organisation. Bermuda is in a good spot, but there’s a lot of competition out there.
A lot of people are gunning for us, so it’s not a time to be complacent. We need to continue driving and pushing forward and creating innovations and outreach with prospective investors and onshore lawyers. All of this is very important.
“There’s more talent in Bermuda with respect to SPIs than perhaps anywhere in the world.”
Justin Hull
Hull: We are very much focused on speed to market, and a three-day special purose insurer (SPI) registration is extremely valuable to us. We know the folks who are involved in this. I think there’s more talent in Bermuda with respect to SPIs than perhaps anywhere in the world. We’re confident that it can be done quickly and effectively.
“In the next year, you’re going to see even more innovative things coming out.”
Brad Adderley
Adderley: Bermuda is a melting pot. We’ve already heard about the new speed market and how the BMA is processing things more quickly. You also need less documentation than before. The documentation is more focused now. That will help us compete.
The innovation taking place is important too. I mentioned the tech side and cryptocurrency potential. Bermuda is a natural place to combine that with ILS. It’s the whole melting pot of what BMA is doing.
Other jurisdictions are trying to compete with us. But they’re trying to catch up to what we’re doing. The BMA is doing an excellent job of keeping one step ahead. Yes we might see more cat bonds in another jurisdiction but that helps grow the whole pie.
In the next year, you’re going to see even more innovative things coming out: different structures, different risks.
Image courtesy of Shutterstock / DCrane
