In the United States, 11,000 people turn 65 every single day. That demographic shift will have far-reaching effects on the insurance and reinsurance industries and is already presenting opportunities and challenges for Bermuda.

Speaking at the Bermuda International Long Term Insurers and Reinsurers Life and Annuity Conference today, Mariana Gomez-Vok, senior vice-president at the American Council of Life Insurers, said of the shift: “What that's going to result in is a 40 per cent increase over the next 25 years. And the number of folks in the US who are 65 or older, that is really significant.”

She added that this surge was driving demand for retirement products with long-term guarantees, meaning offerings that were “extremely capital intensive to offer”.

Jurisdictions such as Bermuda would play a critical role in meeting that demand, she said. “To have jurisdictions like Bermuda that are recognised already by the [National Association of Insurance Commissioners], by the [European Union] as having a robust regime, I think it's going to remain an important piece of the puzzle of where life insurers are going to be able to get access to the capital to help support their ability to provide the products that these new retirees are going to need.”

Gerald Gakundi, deputy managing director, supervision, Bermuda Monetary Authority, also speaking on the panel, pointed to Bermuda’s ability to attract capital. But the sums raised then, might not have the same effect now, even if it does go a long way towards that.

Bermuda’s market is also well placed to manage risk through diversification. Mr Gakundi said: “Our market has been able to pull risks from across different lines of business, from across different regions and geographies, both in the retirement and savings, but also on the [property and casualty] side, and have those risks diversified within single balance sheets in Bermuda. That diversification allows for better adjusted risk pricing of the insurance products that are offered by insurance companies that are closer to the customers, the policyholders.”

He added that the island’s concentration of specialist skills strengthened its role. “We've got a big concentration, especially of that technical expertise in actuarial, on the investment side, the legal side.”

But capital and expertise are only part of the equation. Risk pooling and diversification remained important, Mr Gakundi stressed. “I think the future for reinsurance, the future for insurance is there, and there is a need for the products that insurance provides. There is also a need for the pooling of the risks, because at the end of the day, that is what insurance is.

“That is what makes insurance work. Without pooling of risks and diversification we're going to continue to have pockets of risk concentration, and it becomes very, very harsh.”