Cayman attack on Bermuda is ‘desperate’, say brokers

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Top insurance brokers have come to Bermuda’s defence calling Cayman’s quest to attract reinsurers “desperate” while cautioning Bermuda not to be complacent on matters at home.

“I think Cayman will continue to throw stones because they are coming at us from a desperate point,” said Paul Scope, CEO of JLT Park. “Bermuda’s captive area is the big target that everyone else is trying to chip away at. So Cayman will continue to do that and I guess you can’t blame them but it’s never attractive when you see people taking a shot at competitors instead of talking about what their qualities are.”

Cayman Islands media have been playing up Bermuda’s debt issues and Cayman’s Premier McKeeva Bush recently said his jurisdiction could win Bermuda’s reinsurance industry with more favourable immigration laws and land ownership policies, doing so “without the malice, without the inhibitions of race, without the inhibitions of transport”.

“I don’t look at the Caymans as a substantial threat at this point in time,” said Joe Rego, president and CEO of AON Risk Solutions. “I think it kind of ironic that they are throwing stones considering some of their recent history.”

Both brokers, however, cautioned that Bermuda could do more harm to itself than others from the outside.

“Organisations like ABIR and the BMA are doing as good a job as they can to address those issues but there are internal factors that could help turn the tide,” said Mr Rego. “The Government and industry have to be diligent about how we treat companies, how we make this a more welcoming environment, how we keep it a preferred place to do business whether that be the work permit process or the way we address internal security issues. There are a lot of things that are ostensibly within our control that we need to make sure as a country we’re paying attention to.”

Cayman’s Premier touts his country’s choice not to seek Solvency II equivalence as a benefit of domiciling in the Cayman.

Bermuda has pursued “third-country equivalence” with the European Union’s new Solvency II regulations to ensure that the Island’s global re/insurers will not be competitively disadvantaged in the European marketplace.

A major concern surrounded Bermuda’s world-leading captive insurance sector and whether equivalence would mean captives being subjected to the same increased capital requirements as commercial insurers. However, the Europeans have indicated that they are likely to be prepared to treat captives differently.

“We can’t be complacent and I think the BMA are doing a tremendous job on Solvency II equivalency,” said Mr Scope. “I’m a big supporter of that. It’s going to be some short-term pain but it’ll be a long-term gain because it will differentiate us from everywhere, including the US.

“I don’t think it’s a bad thing at all and if we lose a couple of small captives because of Solvency II equivalency, so be it, if we then attract quality business. Because that is what we are good at doing, attracting large business.”

Mr Scope added that Bermuda’s focus on attracting blue-chip business is better than casting a wide net.

“I have always felt that it’s quality versus quantity,” he said. “Bermuda has been able attract big corporations and it should always be like that. I think it should be quality versus quantity and I don’t see Cayman as a threat in that matter.”

The brokers also said Bermuda’s density of underwriting markets is another competitive advantage over Cayman.

“We trade with 41 counterparties on the island, we can put together 25 meetings in three days for our clients when they come on Island,” said Charles Withers-Clarke, executive vice president of Willis Re. “You could do that in London but you couldn’t do that in Switzerland or Cayman. When setting up a company, people are drawn towards where there is a pool of talent already; that’s a big asset for us.”

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