The leaders of three top Bermuda reinsurance companies yesterday gave their unique perspective on key issues and trends within the global and Bermuda re/insurance market — including what effect Superstorm Sandy might have on the industry.David Cash, president and CEO of Endurance, Chris Harris, president and CEO of Montpelier Re and Don Kramer, chairman and CEO of ILS Capital Management took centre stage at the Bermuda (Re) insurance Conference at the hosted by PWC and Standard and Poor’s Rating Services.The panel’s moderator, Arthur Wightman, insurance leader from PWC Bermuda, led the panel off with the topic that’s at the forefront of most discussions in the industry right now — Hurricane Sandy, which is set to be the second costliest catastrophe in US history with some companies projecting insured losses of up to $20 billion.“Estimates of the Hurricane Sandy losses continue to mount,” Mr Wightman said. “Business interruption claims are the big uncertainty here. These include businesses affected by the power cuts that went far beyond the direct areas of storm damage.“At the very least, this looks set to be another $20 billion plus event, though it is unlikely to be a capital event. The industry’s ability to absorb such losses is a great testament to its readiness and resilience. But this is still another major dent on returns.”He also spoke to the issue of urbanisation, which he said will only increase the severity of catastrophes in years to come.“Over the next 30 years, some 1.8 billion people are expected to move into cities, most of them in Asia and Africa. The world’s urban population will top five billion by 2040. These emerging megacities are concentrating more and more risks in a small number of locations. This concentration is in turn heightening the potential for major property losses.”Mr Wightman then asked each of the panel members to reflect on the event and give their perspectives on the impact of Superstorm Sandy.“It will be a significant event,” said Mr Harris, of MontpelierRe. “I think a few things stand out in my mind. One, just the sheer size of the event. At one point, the storm was almost a thousand miles in diameter so, to [Mr Wightman’s] point earlier about urbanisation, I think just the amount of total insured values in the path of the storm are very high, so a small change there can result in a lot of industry loss.“We’ve obviously got a lot of issues associated with disruption in the New York metro area. That will bring in a lot of items with business interruption and contingent business interruption. And the third point is simply the amount of damage that was caused by water as opposed to wind. It’s not a new issue for the industry but I think that will come to the forefront again.”Mr Kramer, the head of ILS Capital Management and founder of Ariel Re, said the biggest test of the insurance industry is going to come in demonstrating its ability to handle claims.“It was a tragic loss for so many people and the insurance industry’s going to go through a real issue of how well it can satisfy its clients,” Mr Kramer said. “The governors of the three states most affected — New York, New Jersey and Connecticut — made sure that the hurricane clause in most insurance contracts could not be activated because if, when it hits shore, it’s below hurricane levels, homeowners’ policies have a clause that says if it’s not a hurricane, you have to have a percentage — two percent of your house — as a deductible instead of the normal $500 or $1,000 deductible. So the governors made sure the insurance companies couldn’t do that.“Second is the adjusters going around — how fast can they get to it and how effective can they be? The biggest tragedy was Long Island where there was so much damage, Long Island power just couldn’t keep up with it. New York, New Jersey and Connecticut did OK, but Long Island was catastrophic. So the industry itself is going to have to show its ability to handle claims.“And the last thing was that the size of the loss because of flooding and other things. The original forecasts were relatively low with $10 billion of insured losses, now they’re $20 billion of insured losses, but candidly, it will rise from there, but not much more. Business interruption I think is going to be less dramatic than a lot of people forecast.”Mr Cash called Superstorm Sandy one of the biggest events the re/insurance industry has ever seen. He said three of the most interesting events the industry has ever seen all came within the last 12 years.“They’re tragic, truly, but interesting — the World Trade Center, Katrina and then Superstorm Sandy. What made them interesting is that these larger urban areas — they’re just very challenging to insure and then once they’re insured, they’re equally challenging to reinsure. What you have is a lot of very large risks. When a storm hits a location like that, it almost inevitably breaks the models and so I think we’re going to see something similar happens.“The reality is, this loss is going to go deeply into the excess and surplus lines market. It’ll probably find its way to London, then it’ll find its way to layered reinsurance programmes and may find its way into more complicated retrocessional programmes. So this, in a real way, has the potential to be as complicated for the reinsurance industry as Katrina was. Maybe not quite the same size.“I think the thing that will be interesting here is not just the fact that it has the potential to be unusual on the insurance market, I think it has the potential to change the way insurers think about the Northeast.“It wasn’t a hurricane at the time, so if a category zero hurricane can do that much damage when it hits the Northeast and we think we’re living in an environment where our climate is warming, can you imagine what a category two could do or a Category three? So, I am personally expecting a real change in the way insurance capacity’s offered in the Northeast. I’m not sure we’d quite go through what Florida went through in 1993-94 after Hurricane Andrew, but I’m expecting a very significant withdrawal of capacity from that market as well. So I’m expecting the change to be material, I really am.”The Bermuda (Re) insurance Conference continues tomorrow at the Fairmont Hamilton Princess. In attendance at the two-day event are other C-Suite members including the CEOs of RenaissanceRe, Alterra, Aon, Validus Re and Lancashire as well as credit analysts from Standard & Poor’s and industry leaders like Brad Kading of the Association of Bermuda Insurers and Reinsurers and Jeremy Cox of the Bermuda Monetary Authority.