By Raymond Hainey

A new wave of nations could provide a fresh source of business for global insurance and reinsurance firms in Bermuda.

A new report by financial services firm EY said that Asian countries China, with Hong Kong, Malaysia and Indonesia, with the United Arab Emirates and Turkey, offered the best prospects for the industry.

And Latin American countries like Colombia and Mexico were also singled out at growth economies for the insurance and reinsurance sectors.

EY Bermuda insurance leader Pete Cangany said: “It certainly would not mean leaving Bermuda — what it really means is expanding the client base as some of these markets become more accepted and developed and more in line with the expectations of the business world.”

Mr Cangany explained a number of factors had boosted the attractiveness of new markets — including easier access and a more global outlook on the part of newer markets.

He said: “There are companies which have been very successful locally and as a lot of these local companies expand globally, they need reinsurance that has global reach as well.

“They need to go to bigger players and that’s where the Bermuda marketplace offers a great opportunity.”

He added that a slower market and a squeeze on prices in traditional markets had also made the industry cast its eyes further afield.

But he said some companies were taking a wait-and-see approach to emerging markets Mr Cangany said, however: “I suspect a lot of the larger players here are already focused on these jurisdictions — some more than others.

“A lot of companies have a wait-and-see attitude and don’t want to be first in.”

But Mr Cangany added: “There has been some price compression and I think companies will look at other places where they can operate profitably and maintain attractive margins.”

And he said that some major companies had yet to train or recruit sufficient expertise in specific countries and their risk to launch operations.

He added: “That’s why I suspect a lot of companies will tread carefully and gain experience of these jurisdictions or acquire talent and be able to move a little quicker.”

And he added: “It wouldn’t surprise me if the Asian countries, particularly some of the smaller ones, become more integrated when you think about all the wealth created in China, Singapore and Japan.”

Mr Cangany was speaking after the report — prepared with Oxford Economics — highlighted the “shifting insurance landscape in emerging markets.”

The report said that China will continue to dominate in driving premium growth in international markets — but that countries like Mexico, Thailand, Colombia and Indonesia.

The firm ranked countries by opportunity, with Turkey, Indonesia, China, Colombia, Russia, Malaysia, Vietnam, Mexico, United Arab Emirates (UAE) and Brazil making up the top ten.

In terms of risk, Hong Kong represented the lowest end of the scale, followed by the UAE, Chile, China, Saudi Arabia, Malaysia, the Czech Republic, Thailand, Morocco and Poland.

Taken together, the best risk versus opportunity nations up to 2020 will be China, Mexico and Thailand.

EY’s global insurance leader Shaun Crawford said: “The overall contribution of rapid-growth markets to insurance premium growth will continue to be very significant.

“Some of the larger economies, such as Brazil, Russia, India and China, appear to have entered a period of slower growth, but they continue to possess high, long-term potential.

“And new waves of market liberalisation and rapid consumer adoption of new technologies are opening additional markets such as Mexico and Thailand to non-domestic firms.”

But he warned: “Each market has its own distinct risk profile. Insurers will need to model the risks across all the geographies to clearly evaluate the drivers for growth and pick their targets carefully.”

Mr Crawford added: “While investment in rapid growth economies will continue to be vital for global insurance firms, outsized returns will not come easily.

“The wave of regulatory change across the world, consumer buying habits, social media and cultural change, as well as macroeconomics such as the impact of quantitative easing, these are all things that are easy to overlook but which are absolutely critical when deciding to enter and grow in a market.

“The companies that use this information to carefully tailor products and develop market-entry strategies suited to particular economies and their cultures will see the greatest rewards.”