Optimism for the new year
My guess is that few people will be sad to see the back of the year 2020. The year that will be remembered for the devastation wrought by the COVID-19 pandemic looks set to end on a relatively positive note, with the emergence of several vaccines looking set to pave the way for a gradual normalisation of societies, and the global economy, in 2021.
While Bermuda’s re/insurance community has proved itself admirably robust in the face of disruption from the pandemic, the Island has experienced considerable disruption to its tourism industry. A resumption of global travel will allow executives to meet clients, and nurture relationships that have had to be maintained via Zoom calls for most of the year.
It should encourage tourists to begin returning to Bermuda, throwing a lifeline to struggling hotels and restaurants and lifting the Island’s economy.
There are still many uncertainties about the impact the pandemic has had, and will have, on re/insurance companies in Bermuda and elsewhere. Exposures are cropping up via a number of lines of coverage, including workers’ compensation, business interruption, general liability and employers liability, and it will be some time before the full extent of these exposures are fully known.
Business interruption has been perhaps the most controversial and highest profile topic. There is growing confidence that exposures in the US will be very limited, due to the prevalence of explicit exclusions around communicable diseases. The situation in the UK and elsewhere looks less certain, following the Financial Conduct Authority’s test case, involving Hiscox among a number of other carriers, which concluded that some business interruption policies will be triggered by the pandemic.
“The situation in the UK and elsewhere looks less certain, following the Financial Conduct Authority’s test case.”
Despite such uncertainties the mood in the industry is upbeat. While there is universal acknowledgement that the industry adapted well to office closures and working from home, there is an equally widespread desire to resume face-to-face meetings. More importantly, re/insurers welcome the impact of the hardening market, which constitutes, as Aspen’s Christian Dunleavy states in the cover story in this issue, a “re-emergence of fundamentals in underwriting”.
Simply put, it means re/insurers are being paid something closer to fair value for the risks they take on when writing coverage for their clients. This trend looks set to continue throughout 2021, making it easier for carriers to generate a profit through underwriting, and making up for the ongoing challenges in earning money from their investment portfolios, amid super-low interest rates.
More detailed insights about the mood of re/insurance industry executives are revealed in the Bermuda:Re+ILS November Survey, which analyses the challenges faced by chief financial officers, as well as the outlook for cat models.
This issue also includes the next instalment of the Hall of Fame series, which will now take a hiatus. This edition of the Hall of Fame is a little different from the previous incarnations. No industry can operate in isolation, and as a tribute to the service providers and others that make Bermuda’s re/insurance industry what it is, this issue switches its focus to them.
Lawyers, accountants, auditors, regulators and others have played a crucial role in making Bermuda what it is, and Bermuda:Re+ILS is keen to recognise that in its Hall of Fame.
We hope you enjoy the issue.
Solomon Teague, editor
Wave image: Bermuda Tourism Board
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Solomon Teague, editor