What does it take to build a business ecosystem from scratch? The re/insurance world is fortunate to have several major hubs which provide the industry with centres of talent and information exchange which grease the wheels of commerce and help the market to develop into a more resilient, profitable and knowledgeable whole.
The unassuming 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, Greg Wojciechowski sees first-hand just how large a role the country plays in the industry, and after two decades helping to attract more players to domicile there, he knows all the challenges and opportunities awaiting the Island in the future.
He joined Intelligent Insurer’s Re/insurance Lounge, the online hub for interviews and panel discussions with industry leaders, to talk about why Bermuda has an unmatched place in the risk world and what the future holds.
“It’s a combination of many years of work and getting to understand the nuances of the markets.”
Greg Wojciechowski, Bermuda Stock Exchange
Network effects
Wojciechowski is well 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.
However, more international business hubs are eyeing the re/insurance and insurance-linked securities (ILS) markets as a potential building block of 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 that expertise comes from its longevity in the market. Bermuda has over 70 years of experience in the insurance market, and has become one of the third largest reinsurance markets globally. We have adapted and stand the test of time,” he said.
“But it’s not just being there for a long time. There’s the whole suite of things, which I always refer to as a Silicon Valley effect, that need to go into something to make it a leader, and some of those things that are specific to Bermuda and make it a globally recognised financial centre.
“It’s not just insurance, it’s other things that we do—we embrace and uphold international standards of conduct and operation.”
Factors such as the support of a regulator which works to the highest standards while working with the industry to ensure innovation happens within a solid legal framework, and the critical mass of talent, help nurture the type of ecosystem which builds a market like it has over the past decades.
“Those things come together to fortify Bermuda’s being a centre of excellence with respect to specialty insurance, reinsurance and bespoke insurance innovation and solutions. And it’s a combination of many years of work and getting to understand the nuances of the markets in which we operate and the needs of our clients,” Wojciechowski said.
“This has led to the critical mass which creates that Silicon Valley effect of having sponsors, managers, underwriting capacity and broking experience, as well as providing comfort and security through regulation and through other support to investors that consume Bermuda products and services.”
“Competition itself isn’t a bad thing.”
Regulatory framework
“That’s all underpinned by world-class commercial infrastructure, which includes a solid legal infrastructure, which is predicated on UK, English common law, with the right of appeal up to the Privy Council, service providers that are well versed in the industry and its products and respected regulatory framework which is very sensitive to commercial needs in the market,” Wojciechowski went on.
What of the competition elsewhere? Other global financial centres ranging 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.
Wojciechowski doesn’t view the introduction of more players to the market as necessarily a negative for Bermuda.
“Competition itself isn’t a bad thing,” he said. “The more participants you have supporting the business, theoretically there’s more cover out there and capacity to help narrow the protection gap.
“It’s always been my view that competition isn’t consuming more of the pie. Hopefully, it’s growing the pie and the challenges come if Bermuda isn’t on its game—and that is not the case.
“Knowing what I know, you could have some creep away from Bermuda, but that’s not what we’ve seen,” he concluded.
To view the full Re/insurance Lounge session click here
Main image: Shutterstock / guillePagano
