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10


Bermuda Re/insurance Roundtables


America it is Miami. These kinds of places are seeing business which is no longer automatically being placed internationally.


So you’ve got to balance: what is the value of that business and what


is the cost of getting it? There are challenges. It’s not easy to go into the emerging markets and pick up business. Data standards, modelling standards and legal systems are all different, and long-term relationships are often far more important than they are in Bermuda or London. You need time and longevity—that all adds to cost and risk. But if you want to pick up international business, if you want to improve your distribution, some kind of local presence is increasingly necessary.


Rentrup: I would completely agree with that. The big accounts will


always end up in centres like Bermuda or in London. But many of the smaller accounts are regional, where personal contact is very important and worldwide capacity is not needed, and these will be placed in the local markets or regional insurance/reinsurance hubs. With the economic growth in the emerging markets their insurance and reinsurance needs grow and providers of these products who are closer to the market will have the first opportunity to meet the demand.


Few: Another thing that strikes me is that reinsurance is not generally a growing market. Increased retentions, the economic backdrop, other headwinds—in general reinsurance is not growing significantly. But there are parts of the world where GDP growth is exciting—a growing middle class, more need for casualty products, more property value that needs protection, more specialty opportunities through lines such as cargo. That kind of growth is available in certain parts of the world: proper growth, material growth. But it’s from a low base. When you’re struggling to find growth as a reinsurance market in general, surely it’s worth looking at emerging markets to see what’s available. Agriculture is another interesting area. Governments have a vested interest in feeding their voters. Potentially that’s a marketplace that might become increasingly interesting to national insurers and reinsurers.


In terms of the underwriting approach in these emerging markets, do you subscribe to the view that it’s better to have boots on the ground, or do you think it’s better to have centralised underwriting hubs such as Bermuda or Lloyd’s?


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