Insurance in Bermuda to reach US$167.1bn by 2019

14 Jul 2016

The insurance industry in Bermuda is projected to grow at a steady pace as a result of new regulations and consistent growth in external insurance business, such as offshore and captive. Timetric’s Insurance Intelligence Center (IIC) forecasts the industry to rise from US$102.3 billion in 2014 to US$167.1 billion in 2019, at a CAGR of 10.3%.

Solvency II equivalence enhances Bermuda’s reputation

Solvency II equivalence has embellished the reputation of Bermuda’s insurance industry. Equivalence is seen as a stamp of approval for the Bermuda Monetary Authority’s (BMA) competence and more widely that Bermuda is a major financial hub. Other advantages will include less onerous regulation of cross-border business with companies based in Europe. Many European jurisdictions had restrictive regulatory provisions that Bermuda based (re)insurers will no longer have to comply with. Another expected benefit is increased investment from US and Canadian (re)insurers in Bermuda as it will be a destination from which they can conduct their European reinsurance operations.

“Solvency II equivalence is expected to simplify group supervision for Bermudian insurers with operations in Europe. This is because they are able to have a more efficient group supervisory structure regulated only by the BMA, recognized by European insurers as a group supervisor,” comments Jay Patel, analyst at Timetric.

Alternative capital reinforces soft market conditions

The lack of a major US catastrophe (measured in terms of the size of insured losses) in the past decade has meant that there is excess capacity in the Bermudian reinsurance market. The low rates that have emanated from these market conditions have led to M&A between reinsurers in Bermuda. The increasing popularity of alternative capital, which includes ILS and collateralised reinsurance, are adding to the capacity in the sector. The ultra-low interest rates in developed economies are making the returns available from reinsurance attractive to certain investors.

All information is based on the Timetric industry forecast report: ‘The Insurance Industry in Bermuda, Key Trends and Opportunities to 2019’.

Source: Company Press Release