The Bermuda (Re)Insurance
Market Cost of Business
By David Porter, Senior (Re)Insurance Consultant, Frontier Financial Services Limited
The global insurance market remains bullish on Bermuda as a hub for property Cat, ILS, Life and Casualty business-however global market insurance and reinsurance brokers’ fees and commissions are unsustainable and the business model needs to be challenged to make Bermuda the preferred destination for global corporations again.
With a harder market at present, brokers need to think outside the box – simply gaining extra commission is not adding meaningful value or making insurance supportable. Better structured deals for clients, excellent service, first-class product, knowledge of the industry and technical knowledge of the policy forms, endorsements and coverages clients purchase add tangible value to clients in the long run.
Changing the Landscape
The Bermuda market is changing to tackle the challenges it faces, which include poor market share in emerging economies as well as a significantly high cost of doing business which includes fee and commissions charged for clients (Re)Insurance placements. The (Re)Insurance industry in general has been poor at change management, in part because it has overlooked the need to make ground breaking advancements. Brokers and insurers, regardless of location, need to push for modernization and collaboration to build momentum.
The Bermuda (Re)Insurance market has challenges, but more opportunities than threats exist for its insurers and brokers as they continue to be a vital part of the global insurance supply chain. And while small syndicate failures in Lloyds of London and fallout/impact of Brexit have dampened the attractiveness of London as a major financial center, the next few years of transition will likely be a positive catalyst for change in Bermuda.
Use of digital mediums, technology, paperless environments, hot desking, remote working, flexible work, investments in health and wellbeing (and reducing health care costs), and educating staff on lifestyle choices (nutrition, sleep, exercise, rest and relaxation) should be at the forefront of existing and new entrant brokers and insurers in Bermuda.
The Benefits of Bermuda
Along with the potential corporation taxation benefit, sophisticated infrastructure and the uncomplicated legal framework helps attract and retain valuable companies and employees. Bermuda’s standard of living will be a key driver in keeping people on the island and also attracting new companies and employment to its shores. We have seen that the significant work from the Bermuda government and Bermuda Monetary Authority (BMA) has been reflected with the EU council removing Bermuda from the EU tax grey list. Work still needs to be done with the Bermuda Business Development Agency (BDA), government, the BMA and other parties on collaboration, modernization and digitization in making Bermuda an agile, cost-effective jurisdiction with world class insurance knowledge, service and training for enrichening new talent.
For existing entities in Bermuda, change management is a must, and a robust start-up strategy for new entrants is key to breaking the mold even though successful models may have worked in the past.
A Fresh Perspective
Often an outside view can help companies establish new vision and one such option is to use (Re)Insurance consultants periodically with some external scrutiny to create significant cost benefits over time.
David Porter is the Senior (Re)Insurance Consultant for Bermuda-based Frontier Financial Services Limited. Frontier specializes in permanent and consulting recruitment for accounting, underwriting, human resources and finance.