Bermuda Re/insurance Roundtables
“There is demand for contingent business interruption coverage, but the question is whether that demand is willing to meet the needs of those who will provide such coverage?”
gathering points are typically useful in insurance. Reinsurance is much more portable. Zurich has become popular for continental Europe—we’re there along with a number of other people. Singapore is growing—more and more people seem to want to do Asia out of Singapore. But Lloyd’s was very ambitious in wanting to set up geographic gathering points and now they’re sort of questioning whether that’s the right strategy. They find that a lot of that business will make its way to London anyway. It’s not as though these centres don’t have attached expenses. The real question is: how much incremental business do you feel you’re going to receive on the reinsurance side by having a local presence?
Cooper: One of the difficulties is that a lot of business that makes
it out of those regional homes is the business where capacity is needed, and that tends to be better priced business than the smaller programmes from a reinsurance standpoint. Any time you have a regional hub set up, you run the risk of running business because you need to write business, and that is clearly what we’ve seen a lot of companies struggle with in Latin America. Singapore has had mixed results. A lot of these markets are relatively immature and it represents an expensive R&D project for some people.
Few: I may be slightly more pro-local market than some others although
I agree with the general concept that local expansion needs to be matched by quality and certainly you’ve got to look at the expense issue.
For our part we’re attracted to reinsurance business which is
quite local and perhaps less volatile, with greater focus on personal lines and homogeneity. That kind of business around the world is increasingly being closed locally. What you’ll see in London or Bermuda is that those hubs tend to see larger cat-driven placements, more complex business, more complicated commercial risk. Companies will still come to London and Bermuda, but increasingly personal lines and smaller commercial business is being placed locally, and if you’re not there you simply don’t get it. You can now easily place a billion dollar facultative placement in the Singapore market without London participating. That was not happening in the early 2000s, but now it is not a problem.
If you are looking at the overall portfolio you are trying to build, local business is attractive enough to have some hubs. To Marty’s point, it isn’t the same as insurance. You don’t need to put an office in every town. For Asia it is Hong Kong and Singapore, and increasingly a presence in China would make sense. For Europe it is pretty much Zurich, while for Latin
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