As the world celebrates Earth Day, John Huff of the Association of Bermuda Insurers and Reinsurers (ABIR) looks at the island’s role in closing the global protection gap.
Over the past 20 years. Bermuda’s (re)insurers have paid nearly a quarter of a trillion dollars in claims from natural and man-made disasters in the United States and European Union alone.
As we celebrate Earth Day, it’s important to remember that every day is Earth Day in the (re)insurance industry. Our industry plays a critical role in developing innovative adaptation solutions, in measuring and pricing climate risks to inform risk management, and in providing economic support to people and communities when disasters strike.
Climate risk is a priority for member companies of ABIR. They bring their expertise, innovation, commitment and claims-paying capacity to secure a more resilient world.
With partners from government, our internationally recognised consolidated regulator the Bermuda Monetary Authority (BMA) and the (re)insurance industry with its historic legacy of leadership in responding to global natural catastrophes, Bermuda has the foundational elements to become a leader in climate risk finance.
The recently announced BMA climate sandbox will give Bermuda’s financial services ecosystem the requisite regulatory and supervisory guidance, support and parameters to pursue innovative solutions to climate change risk. When Bermuda innovation and entrepreneurship prevails, consumers around the world benefit.
All told, Bermuda represents more than one-third of the global P&C reinsurance market and has a history of taking risks in some of the world’s most disaster-prone regions. At the heart of this commitment is talent. The people who work for our ABIR member companies are second to none when it comes to modelling, analytics and underwriting risk.
Underpinning this risk assessment is scientific research. Because of its location, Bermuda is a readymade climate lab, surrounded by an ocean that serves as a real-life classroom for studying the forces behind our changing climate. The Bermuda Institute of Ocean Sciences, or BIOS, observes and analyses oceanographic and atmospheric conditions from a research vessel in the Sargasso Sea, which is one of the world’s most diverse open-ocean ecosystems.
The Bermuda market joins insurers and reinsurers across the world committed to activating the global sustainable agenda by fostering new mitigation technologies through their assumption of risk and by investing in sustainable assets.
Armed and informed with the latest research and data, Bermuda is working diligently to close the protection gap – the difference between natural catastrophe and man-made economic losses and insured losses – which stood at $113bn in 2020.
Most of that gap exists in emerging economies, so ABIR member companies join with the Insurance Development Forum (IDF) in committing $5bn of (re)insurance capacity to developing nations by 2025.
In addition, the IDF and its affiliates are developing an accessible, open modeling platform – with Bermuda leadership – that will greatly improve predictive capabilities in some of the world’s most disaster-prone regions.
ABIR is proud to join its industry partners from around the world in these efforts. Championed by the Global Federation of Insurance Associations, which represents nearly 90 percent of the global insurance market, we are contributing to the effort to build a sustainable planet.
Leveraging their tools, talent and capital, all stakeholders will work together toward resilient and sustainable recovery. As an industry, we are strongly committed to this critical joint effort to #RestoreOurEarth.
On behalf of ABIR and its member companies, happy Earth Day.
John M. Huff is president and CEO of the Association of Bermuda Insurers and Reinsurers and a former president of the US National Association of Insurance Commissioners.