Bermuda Insurance Industry
Insurance and reinsurance sector form the largest part of Bermuda's international business
. This sector has become a leading offshore financial services center in the world. In 2009, the insurance and reinsurance sector reported total assets of $442 billion. In comparison, the banking sector had total assets of $22.8 billion, and the Islandís investment funds sector reported an aggregate Net Asset Value (NAV) of $171 billion.
The first international insurance company in Bermuda was formed in 1947. Since then the insurance and re-insurance market in Bermuda has been ever growing. In 1960s and 1970s, the captive Insurance sector brought in the first major wave of insurance company formations in Bermuda.
This was followed by the Excess Liability Insurance Market in the 1980s. And in 1992/93 following hurricane Andrew, there was a large influx of capital into the island to form Bermuda catastrophe reinsurance companies. The trend continued through 2005 with more hurricane strikes in Bermuda like Hurricane Ivan in 2004, Katrina, Rita, Wilma in 2005 etc.
Following 9/11 incident, more than half the new capital raised globally for reinsurance market came to Bermuda. Existing Bermuda insurance companies were also successful in raising additional capital.
Along with the capital flow, came in talent and intellectual capital as well. Compared to Bermuda, no other country in the world has a higher percentage of actuaries, accountants or underwriters among its population.
This combination of large pool of capital and intellectual property eventually made Bermuda a powerhouse in corporate risk management. With the large number of international companies having their head offices in Bermuda, the island has become a major player in insurance and re-insurance sector globally, second only to London and New York.
Although the sector initially grew a lot in the area of Catastrophe insurance, over the last many years the sector has widened to include primary insurance, life insurance and many other specialized lines. There are also many subsidiaries of re-insurance and global insurance companies that operate out of Bermuda.
But there are other reasons as well for Bermuda to become one of the super powers in the insurance sector. In fact, the main reasons are the ease, convenience, speed and efficiency of transacting in this market.
Another reason why new insurance companies prefer Bermuda is because it is a domicile of choice for other insurance companies. Like any other business, insurance companies also like to set up business where there are others who they can do business with, either as a customer or as a service provider.
Bermuda also provides a unique advantage to offshore domiciles - it is the only place with a substantial and growing non-captive, commercial property and casualty insurance and reinsurance sector.
Update 2012: Bermuda's strength as the major International Insurance hub continues to grow. Bermuda Monitory Authority (BMA) has reported that 2011 new registration of insurers in the island has been 50% more than 2010.
Here are few types of insurance company formations in Bermuda
Bermuda was the first to introduce Captive Insurance. Here is a review of how Bermuda has become the world leader in this sector.
Excess liability insurance coverage in Bermuda started in 1985 in response to the demands from the large US corporations.
A review of the reinsurance sector in Bermuda - how it emerged, what were the market forces and how it has grown to be a market leader.
While Bermuda's media focus has always been on its international insurance business since this is where Bermuda is one of the world pioneers, the domestic insurance in Bermuda has also grown in equal pace to cover the thriving local businesses and people of Bermuda, including the employees of the international companies working in the island.
New companies continue to come up in Bermuda, writing almost all types of insurance and reinsurance. Capital and surplus have kept growing, and coverage capacity to the buyer has continued to increase. Bermuda is an undisputed global leader in the field of insurance.
Insurance business in Bermuda (both local and International) became so successful that in 1960, the executives of this industry met to discuss how the professional quality of the employees can be further increased. This resulted in the formation of Bermuda Insurance Institute in 1970. The institute today is a major educational resource in the industry for professionals at all levels.
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