Editor’s note
The default choice
It has been five years since Captive International last published Bermuda Captive—now rebranded Bermuda Focus. In that time much has changed, but much has also stayed the same.
The world is still in the midst of the biggest global pandemic in more than 100 years, which has had significant implications for businesses and the way they view risk management. Even before the pandemic hit the market was hardening, giving many people who have been in the insurance industry for years their first taste of a market in which the balance of power has tilted back towards insurers.
Technology is advancing rapidly, upending ways of doing business that have existed for centuries, with things such as artificial intelligence and distributed ledger technology promising increased efficiency and disintermediation.
“Bermuda is on the front line in developing products to effectively manage these emerging risks.”
Solomon Teague, Captive International
Amid all this change, one constant has been Bermuda’s leading position as the world’s premier captive insurance domicile.
The captive insurance industry and Bermuda are inextricably linked. Since the launch of the Island’s first captive in 1962 it has consistently led the sector, in terms of the number of captives operating on the Island and the quality of the service providers supporting them. In 2021, as the market hardens and insurance coverage gets harder to find and more expensive in the commercial market, there is increasing interest in captives, and Bermuda will be one of the biggest beneficiaries of that trend, as always.
A theme that runs through this report is the innovative spirit that Bermuda has cultivated. This goes across the industry, from the captives themselves and a growing number of insurtechs, up to the regulators and policymakers who oversee business on the Island. This innovative spirit has helped Bermuda to thrive in what has, in recent years, become an increasingly competitive business.
More than half of the states in the US have captive insurance regimes. A significant proportion of them are fighting hard to attract captives to their shores, offering attractive regulatory and tax environments that, they argue, match what is available in Bermuda.
Despite these efforts, Bermuda remains the default choice for many of the largest companies in the world looking to set up their own captive. Its regulator and rules are well known and trusted, and the infrastructure supporting the industry is second to none.
It is the global centre for insurance-linked securities, which are being used in increasingly diverse and interesting ways, including by a growing number of captives. When a business has a complex or unusual risk to insure, for which coverage is unavailable in the commercial market, Bermuda is the obvious place to turn.
There is evidence for this everywhere. In this publication you can read about the work Bermuda is doing to insure risks that the commercial market is ignoring, for example in the cannabis industry. It is often noted that a growing proportion of corporate value is now held in intangible assets, such as intellectual property and reputation, and Bermuda is on the front line in developing products to effectively manage these emerging risks too.
The COVID-19 pandemic is a timely reminder that life can be very unpredictable. Risks change in ways that are very hard to forecast and adapt to. But one thing does look certain: Bermuda will remain in the vanguard of global risk management for many years to come.
We hope you enjoy the issue.
Solomon Teague, editor, Captive International
