development broadly over the next three years.

The new plan, as David Fox reports, comes as the industry seeks a more business-minded approach to plotting a line of continued success for all aspects of the Bermuda insurance market.

The marketing committee of Government's Insurance Advisory Committee (IAC) is taking a new business plan to the insurance industry -- a new plan that has already won the endorsement of Government.

The marketing committee is spear-heading marketing initiatives directed at the international insurance and reinsurance industries -- stepping up generic marketing efforts to maintain Bermuda's position as the leading offshore insurance domicile.

Through meetings with insurance managers, underwriters and brokers the marketing committee will seek additional funding to finance a more substantive marketing approach.

The Registrar of Companies reports 30 to 50 companies are routinely removed from the register annually. So every year, Bermuda has to attract more insurers. Standing still, in that regard, is equivalent to going backward.

Having this year secured Government funding of $600,000 (1997: $350,000), the IAC is now seeking an additional $300,000 from the industry to help encourage more insurance and reinsurance activity on the Island and increase awareness of the Bermuda industry in targeted markets overseas.

The IAC marketing committee is promulgating its new marketing scheme as the worldwide insurance and reinsurance markets are in a quandary.

In a true marketplace, where supply and demand principles are really played out, there is too much money being offered to satisfy an increasing demand for highly complicated risks.

More capital sources see the potential for profit through writing risk products. They are the ultimate in gamblers, wagering portions of capital that they can hire smart enough underwriters to write to a profitable standard.

Bermuda's increasingly-watched market is competing for business in one of the softest markets on record.

In layman's terms, that means that just as Bermuda has come of age, becoming one of three key jurisdictions for worldwide insurance products, so many people are trying to provide insurance products, the cost is being driven down to one of its lowest levels ever.

The trouble is that prices are not just depressed -- they are really depressed. The continuing yearly slide in pricing has led to a cumulative and geometrical deterioration in what the buyers are willing to pay for the product.

In a buyers' market, you can always go to another supplier to get a better price, even though a low price for insurance is of no consolation when the buyer can't get claims satisfied because their low-price insurer is forced out of the market as a result of their adverse claims experience.

At some point, a business starts to lose market share when it can't, or refuses to, compete for the business. Bermuda insurers have long noted that some companies are writing business to a less than satisfactory standard, and although they may be attracting market share, potential high-severity losses could wipe such firms out.

The Bermuda companies, blessed with still relatively unblemished capital, some of the best insurance brains on the planet and a business-minded regulatory environment, have tried to avoid the direction of many competitors who are writing insurance further and further below the price that prudence dictates it should be.

After a long period of low loss experience, the overall industry is aware that the law of statistical probability guarantees that losses will one day come.

When they do, those firms that have taken unwise chances could fold.

The more sources of insurance that are driven out of the market, the more the price for insurance products will finally be driven up. Again, supply and demand.

So Bermuda is becoming entrenched as a world insurance player at a time when everyone is waiting for the industry to suffer heavy losses.

Many Bermuda firms, that have not been so willing to risk their capital through reckless underwriting, have sought to grow their businesses through other means.

Some have started writing new lines of business, where there may have been more demand than supply. Others are writing more multi-line and multi-year coverages.

Still others have sought out capital partners. There have been mergers, consolidations and strategic business alliances, in many cases providing business or geographical diversification.

This is all happening as more new, non-insurance players are trying to get into the insurance market. Investment banks like Goldman Sachs and Lehman Brothers have been shareholders in insurance and reinsurance schemes. They are now incorporating new entities in Bermuda -- their own reinsurers.

It is against this back-drop that the marketing committee of the IAC has established a new business plan.

Roger Gillett