Bradley Kading: Bermuda-based reinsurance benefits Florida
Oct 27, 2010
This article was published in the Gainesville Sun on October 27, 2010:
Association of Bermuda Insurers and Reinsurers President Bradley Kading: Bermuda-based reinsurance benefits Florida
Paige St. John’s articles about the reinsurance industry (Gainesville Sun October 25 and 26) correctly calls attention to three facts:
1. With more than 60 percent of the wind risk of the entire United States, Florida faces huge challenges to insuring its homes, businesses, and other properties. Insurance companies in Florida purchase backup insurance, reinsurance, to diversify these risks into the global private markets. We are proud that much of this reinsurance to safeguard Florida’s home and businesses comes from companies headquartered in Bermuda.
2. Florida insurance companies that have invested in private reinsurance can assure their own customers that in the event of hurricanes and other catastrophes, their claims can be paid.
Through international reinsurance, it is possible to pool the hazards of hurricanes in the U.S. with the risks of earthquakes in Chile, typhoons in Japan and tsunamis in Thailand.
3. The premiums Floridians have invested in reinsurance have paid enormous dividends. With Hurricanes Katrina, Rita and Wilma in 2005, more than 60 percent of the $59 billion in payments
came from foreign insurers and reinsurers. The record shows that no Bermuda-based reinsurer has ever been unable to pay Floridians’ claims for catastrophes.
Bermuda reinsurance companies are reliable, responsive partners for Floridians and others in need of reinsurance around the globe. Seventeen Bermuda-based reinsurers together have 37 percent of the world’s property and casualty reinsurance market, according to AM Best. In addition, there has never been an insolvency among the companies that are members of the Association of Bermuda Insurers and Reinsurers.
Far from being “famously light,” Bermuda’s regulation of the insurance industry is robust and sophisticated, focusing on cutting-edge practices in risk-based capital adequacy. The regulatory body, the Bermuda Monetary Authority, is a well-respected, independent government agency, headed by career civil servants, similar to many state insurance agencies in the U.S. The International Monetary Fund has recognized Bermuda’s insurance and reinsurance system as an effective regulatory regime and trusted global partner. In fact the Florida Insurance Department has a legal cooperation and legal information-sharing agreement in place with the Bermuda Monetary Authority.
Florida hurricanes are the biggest natural peril in the United States. Self-insuring this risk within Florida, particularly by depending on post-event assessments from Florida’s small businesses and consumers, would be bad public policy and unsound risk management. There’s plenty of room for debate about how
best to prepare Florida from these all-too-frequent calamities, but this debate must be informed by the facts. ABIR and its members will continue to contribute their capital, solutions, mitigation technologies and best ideas to support a safer, stronger, more sustainable Florida.
President and Executive Director
Association of Bermuda Insurers and Reinsurers (ABIR)
Find this article at: http://www.gainesville.com/article/20101027/NEWS/101029548/-1/opinion?p=all&tc=pgall