The future of Bermuda's insurance industry is sustainable despite the challenges it faces ranging from the threat of the proposed Neal Bill to the recent spate of violence that has swept the Island.

That is the view of Brian Duperreault, president and CEO of Marsh & McLennan Companies, who gave the opening keynote address on the second day of the Insurance Day Summit held at the Fairmont Hamilton Princess hotel yesterday.

Mr. Duperreault said that Bermuda would continue to thrive due to the cyclical nature of the market and its position as a market leader allied to its ability to succeed during a crisis.

"This is a cyclical place, it doesn't grow in a straight line to the sky," he said. "It wrenches forward and it declines - we have incredible job growth and then it starts running off as well as capital growth which then falls away and the declines are usually followed by increases.

"This is the way of life and this is the cycle of life, it is no different to any other business in the world. We are frankly the best in a crisis and that is how we make our mark in the world.

"I always say, in the insurance business when things are bad it is great and when things are great it is bad. It is great right now so it is bad in the insurance world."

Mr. Duperreault said that the Island enjoyed strength in numbers and given a reasonable time horizon it had momentum going forward.

But he admitted it was not without its own issues, both internal and external, including the Neal Bill, matters of regulation, the reaction to Solvency II and a soft market and everything that brought with it, in addition to the escalating violence which has become common place in today's society and the relationships between the industry, regulators and Government.

"Frankly when I think about it, I take a step back and say it is no different to any other place in the world in that respect," he said. "I frankly believe that the Bermudians have shown a tremendous practicality and pragmatism when necessary.

"This industry didn't get to where it is without some positive work by the people of Bermuda. Therefore I think it is sustainable.

"If you look at Bermuda figuratively it may be trading below book, but we are just a crisis away from showing our true value."

Mr. Duperreault had started the talk with an insight into the history of Bermuda's insurance market and how it had evolved during the decades since the 1950s.

He said he first realised the Island's potential when he had a chance to see the strong work ethic, professionalism, expertise and infrastructure first hand in 1994 and was later exposed to it in his roles at both Ace and American International Group, allied to a sizeable GDP.

"I said, let me look around here, this place has got legs, it has got everything we need to create quite an industry and in particular companies within it with great support, we just need to diversify, but that was more the possibility than the reality at the time," he said.

"15 years later from that quite narrow tight nichey place this place is now world class, it is as good as you get - it is in the big leagues of the insurance business. If you want to have a career in this business this is where you want to be.

He added: "I would say that there is some sense of decline here, let's face that.

"In the last decade we certainly had a lot of responses to events, but yet overall new company formations are down, as is employment activity, in addition to downsizing, expense control and consolidation.

"Equally I am an optimist and a Bermudian and believe there are a lot of reasons to look up."

Mr. Dupereault was also part of the CEO leadership panel on 'Identifying strategies to tackle key risk areas in 2010', which was moderated by Keith Buckley, global head of insurance at Fitch Ratings, and featured Charles Dupplin, CEO of Hiscox Bermuda, Conan Ward, CEO of Validus Re, and Kevin Kelley, CEO of Ironshore.