ILS
Bermuda: the Silicon Valley of the insurance world
Bermuda Stock Exchange chief Greg Wojciechowski discusses the importance of the Island as a centre for the global re/insurance industry and how to tackle rising competition from other hubs.
“We embrace and uphold international standards of conduct and operation.”
Greg Wojciechowski, BSX
The re/insurance world is fortunate to have several major hubs that provide the industry with centres of talent and information exchange which, in turn, grease the wheels of commerce and help the market to develop into a more resilient, profitable, and knowledgeable whole.
The tranquil shores of Bermuda may have seemed an unlikely destination for such a commercial centre, but as the re/insurance’s industry’s presence on the Island has grown over the decades, so has its place in the risk world and beyond, solidifying it as a vital limb in the corpus of the sector.
As president and chief executive officer of the Bermuda Stock Exchange (BSX), Greg Wojciechowski sees just how large a role the country plays in our industry, and after two decades helping to attract more players to domicile there, he knows the challenges and opportunities awaiting the Island in the future.
He spoke to Bermuda:Re+ILS about why the Island occupies an unmatched place in the risk world and what the future holds. Wojciechowski is aware of the importance of creating an integrated ecosystem and how those network effects have helped Bermuda to the position it now enjoys as one of the world’s pre-eminent centres of the risk business.
More international business hubs are eyeing the re/insurance and insurance-linked securities (ILS) markets as potential building blocks for their own growth in the future, so what can Bermuda do to ensure that it retains its reputation as a centre of the industry?
For Wojciechowski, it comes down to what he calls the “Silicon Valley effect” of concentrated talent, regulatory support, and a free flow of ideas and innovation that gives the Island an edge over would-be competitors.
“Bermuda has expertise and longevity, and that expertise comes from its longevity in the market. It has over 70 years’ experience in the insurance market and has become one of the three largest reinsurance markets globally. We have adapted and have stood the test of time,” he said.
“It’s not just a question of being there for a long time. A whole suite of things, which I always refer to as a ‘Silicon Valley effect’, have helped make it a market leader. Some of those things are specific to Bermuda, which is why it is a globally recognised financial centre.
“Of course, it isn’t simply about insurance, it’s the other things we do. We embrace and uphold international standards of conduct and operation,” he added
“It’s always been my view that competition isn’t consuming more of the pie, it’s growing the pie.”
Nurturing the ecosystem
Factors such as having a supportive regulatory environment, and a critical mass of talent, have helped to nurture the ecosystem and build a strong market over the past decades.
“Those things come together to fortify Bermuda as a centre of excellence with respect to specialty insurance, reinsurance and bespoke insurance innovation and solutions,” Wojciechowski explained.
“It’s a culmination of many years’ work, getting to understand the needs of our clients and the nuances of the markets in which we operate.
“This has led to the critical mass, which creates that Silicon Valley effect—having sponsors, managers, underwriting capacity and broking experience, as well as providing comfort and security through regulation and support for the investors who consume Bermuda’s products and services.
“That is underpinned by a world-class commercial infrastructure, including a solid legal infrastructure that is predicated on UK common law, with the right of appeal up to the Privy Council. We also have service providers that are well versed in the industry and its products, and a respected regulatory framework that is very sensitive to commercial needs in the market.”
Other global financial centres, from Singapore to Dubai, are beginning to set up regulatory regimes of their own for asset classes such as ILS, taking a longer view in a bid to attract more startups and current industry players to domicile in these jurisdictions.
But Wojciechowski doesn’t view the introduction of more players into the market as necessarily a negative for Bermuda.
“Competition itself isn’t a bad thing. The more participants you have supporting the business means that there’s more cover out there and the capacity to narrow the protection gap. It’s always been my view that competition isn’t consuming more of the pie, it’s growing the pie.
“We know what the challenges are, and Bermuda is on its game,” he said.
Wojciechowski points to the market’s resilience over time and its ability to adapt to the ever-shifting demands of the industry. These are what sets it apart as one of the pillars of the re/insurance world.
“Bermuda isn’t just a flash in the pan. It’s been there, standing by the global market, and that solidifies its tradition in our small slice of the world,” he concluded.
