12 May 2023Alternative Risk Transfer

‘Every epilogue for Bermuda incorrect’: Premier Burt is bullish on change

“Every major innovation in insurance that has happened in the last 30 years has happened in Bermuda.” That is the boast of Bermuda Premier and Finance Minister E. David Burt (pictured), who spoke to Intelligent Insurer’s sister publication  Bermuda:Re+ILS in London days after he represented Bermuda at the King’s Coronation on Saturday, May 6.

That statement is also the reason he is relaxed about Bermuda’s future role in the global risk transfer landscape. Despite the rapid pace of change in the types of companies operating from the domicile, despite higher interest rates, the spectre of banking failures in the US, the potentially disruptive force of artificial intelligence, he is in a confident mood.

“Our entire international business industry is important to us, and we continue to diversify. Insurance is the cornerstone and the government and regulator continue to work to ensure we remain the leading domicile of choice. We continue to innovate and adapt our regulatory framework to match changing trends globally. We want to ensure we can continue to survive and thrive. But across the past 30 years, every major innovation in insurance has happened in Bermuda. That is why I am so confident we can adapt.”

The risk-transfer landscape in Bermuda has shifted considerably in those three decades. Sectors such as captives were born on Bermuda much earlier, but it was the big carriers such as ACE and XL, born in the mid-80s initially to solve a liability capacity crisis in the US, that represented the start of a new era. They employed a lot of people. They were followed by the many reinsurance start-ups that arrived in the wake of Hurricane Andrew in 1992 and after the September 11, 2001, terrorism attacks.

Fast-forward to today, the mix has changed again. New carriers and capacity still choose Bermuda, but they are leaner in headcount. Many other industries have sprung up: Bermuda is the global hub for ILS and rapidly growing its footprint in other areas of risk transfer and bolt-on sectors, including in long-term/life re/insurance, legacy, climate finance – and, more recently, insurtech.

Burt sees this change as a natural process – and also one that offers greater diversity for Bermuda. “I don't view that dynamic [of change] as a bad thing. It's just a natural evolution of the way in which business works. Businesses, especially insurers, find ways to be more efficient and deliver value to shareholders while continuing to solve problems.

“It's a transition. Whether it's the advent of ILS where fewer people are needed or future challenges in regard to artificial intelligence, from Bermuda’s perspective we don't need that much to move the needle. If anything, it brings even more companies to our shores, providing more diverse experiences and solutions. So, I don't necessarily view that change as a net positive or negative. Overall, the industry continues to grow. Employment in the international business sector has grown.”

He emphasises the country’s recent success in specific parts of the risk transfer spectrum such as the long-term/life space, where many new companies have launched in Bermuda in recent years as being testament to the attraction of its robust and respected yet flexible regulatory framework and its long-term stability as a domicile. On the insurtech side too, he believes Bermuda remains the best location for innovation of that type, whether it’s through standalone insurtechs or in-house within carriers.

Against a backdrop of change within the risk-transfer space, he comments that Bermuda and its future relevance has been questioned many times before. Yet it remains the go-to domicile for so many types of companies operating in the risk-transfer space.

“We're here, we continue to survive. The epilogue for Bermuda as the leader in the global insurance market has been written so many times, yet every single time they've been proven incorrect. We are going to continue to thrive because we understand what it takes as a jurisdiction to be a real international financial centre. And that is what we will continue to do.

“On top of that, we embrace innovation. You cannot be afraid of innovation. There's nothing that you can do to stop AI or many other things. Instead, the question is how you make sure your economy is equipped to embrace that change while still solving the world's problems through risk transfer. I have no doubt that modernisation and the pace of change in technology will only enable us to do our jobs even better than before.”

A longer version of this article will appear in the next issue of Bermuda:Re+ILS available in June.

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