Column: Bermuda’s IB & Hurricane In Florida
[Opinion column written by Larry Burchall]
A state Representative in Florida, Frank Artiles [R] was critical of Bermuda based reinsurers. According to an article published in the Insurance Journal, back in March 2015, Artiles was criticizing Florida’s plan to lay off some of the State’s hurricane risks by paying up to $2.0 billion in hurricane insurance premiums to reinsurers based primarily in Bermuda.
The article said: “It’s also clear from his comments that Mr. Artiles has some difficulties understanding the very concept of insurance. The beneficiaries of risk transfer are the people who otherwise would shoulder the burden of that risk – in this case, taxpayers and policyholders throughout the state, who only this month [March 2015] finally finished paying off the hurricane taxes from the 2004 and 2005 seasons.
Bermuda reinsurers are no more the beneficiaries of this change than any insurers writing any business anywhere. They’re taking on risk. Whether that risk proves to be fortuitous is something only time will tell. The opportunity to trade a potential large loss for a small but certain one is the reason we buy insurance in the first place.”
Right now, with Hurricane Matthew’s impact on Florida, I think all of us, Bermudians as well as Florida State high-muck-a-mucks, can better understand the place and importance that Bermuda Reinsurers have in some catastrophic events that can occur thousands of miles away from Bermuda.
Our Reinsurers in Bermuda stand to take a big hit because of the risks that they took on as a consequence of accepting what looked like a fat juicy premium.
However, if their performance after the 9/11 and Katrina disasters are anything to judge by, they’ll be first on scene and will assess and pay up fast.
Then they’ll fly back home – to Bermuda – and recalculate the premium for next year and – as insurers do – hope that the fates are kind and no Matthew #2 blows up in 2017.
And maybe Rep Artiles – and some of us – will learn and understand how insurance and reinsurance really works; and how it fits into Bermuda.
- Larry Burchall
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Larry , The hurricane is over. It’s time for you to come back out. I enjoy reading what you have to say. There are far to many interesting things happening in Bermuda now ,that I along with others would love to hear your take on them .