Premier Alex Scott yesterday floated the idea of creating a regional insurance pool to help cover damage from future natural catastrophes in Caribbean nations after some were devastated by unprecedented hurricane activity this season.

The combined effect of the storms has been billions of dollars in damage in both the Caribbean and some southern US states after the onslaught of four hurricanes in six weeks. Estimates put the price tag of insured losses from Caribbean damage alone at more than $2 billion.

Speaking to an audience of reinsurance executives gathered for the first day of the annual Hawksmere International Reinsurance Congress, Mr. Scott called on this sector to meet a real need for continued risk solutions for the Caribbean region.

He did not spell out whether he thought Bermuda - which was itself hit by millions in damage from Hurricane Fabian a year ago - should be included in the proposed Caribbean insurance pool. But he did say that Bermuda could play a role in finding risk solutions, beyond the multi-state pool concept, for the region.

Mr. Scott said change was a constant: "Change is everywhere and the effects are being felt in the boardroom and on the shop floor", but that the reinsurance sector had historically rolled with the punches.

"Insurance and reinsurance is an essential part of any business but as an industry, reinsurance has experienced some pretty trying times."

Despite this, the reinsurance industry had proven time and time again that it could meet challenges, he said. As examples, he spoke of the wave of reinsurers that set up in Bermuda in response to a capacity crunch after Hurricane Andrew hit Florida in 1992, causing in today's dollars about $20 billion in insuranced losses. And similarly, he spoke of the impact on and response from the industry after billions in multi-line claims following the September 11, 2001 terrorist attacks.

Mr. Scott said the losses that could follow an event were also fresh in mind from the run of four major hurricanes this season - Charley, Frances, Ivan and Jeanne - that are expected to generate claims of $22 billion or more, according to various industry agencies.

He said the challenges from these kinds of events were with us still with the continued threat of terrorist attacks and the unpredictable nature of natural catastrophes.

But he stressed that the industry looked ready to weather the storm - with ratings agencies saying the latest claims from the hurricanes should not undermine the financial stability of the industry - and added that as before, reinsurers should continue to look at how they could provide solutions.

In response to the huge losses from Hurricane Andrew, Florida established state insurance mechanisms that act as a kind of backstop for insurers facing the high costs that natural catastrophes can bring. Mr. Scott said this lead could be followed for the Caribbean.

Mr. Scott said the need to make sure the Caribbean continued to have access to risk management was underscored during a trip last month to the UK to attend the Overseas Territories Conference.

"Small nations need to insure against acts of God," he said, pointing out Caribbean damage from the latest storms hit a region that had historically lost "quantifiable areas of their gross domestic product (GDP) to natural disaster".

Mr. Scott said there was a very real need to ensure that affordable domestic insurance remained available to smaller nations.

He challenged re/insurers to make themselves part of this solution, saying that if they stepped up to bat for the smaller Caribbean nations it could quiet critics who question the industry's global commitment.

Mr. Scott concluded there was the potential for new development of products, especially right here in Bermuda, which he called the "incubator of the new world market".

"Some form of sovereign reinsurance can be created by Bermuda's innovative reinsurance thinkers in partnership with governments in the Caribbean region to indemnify small nations."

In tomorrow's business section: Leading reinsurers speak to the issues facing the industry, including the frequency of disputes going to arbitration, diverse views on the future of Bermuda as a leading reinsurance market, the likelihood of consolidation between sector players and where rates are likely to go.