Bermuda’s burgeoning legacy insurance sector could be the place where a problem for another rapidly growing pillar of the Bermuda insurance segment is solved.

Lawyer Peter Dunlop of Walkers tells Bermuda:Re+ILS in a video interview that the legacy market is the natural place to find a solution to the problem of trapped collateral, which is a stumbling block for the insurance-linked securities (ILS) market.

Some investors have had difficulty recovering their capital from ILS vehicles because claims, or the risk of claims, have taken longer to resolve than the life of the catastrophe bond or other ILS vehicle.

“It’s an issue you can isolate and sell into the legacy market.”

But Dunlop, who has worked as an underwriter and as an insurance lawyer, says Bermuda may have an answer.

“We still have problems such as trapped collateral but there are solutions to that. I would love to see a ready-baked solution every time a deal is placed.

“You can securitise those as well, and I think the legacy market has to step up and solve that as an issue. It’s an issue you can isolate and sell into the legacy market.”