Bermuda needs to bring down the cost of doing business to maintain its attractiveness to global re/insurers, the chief executive officer of Arch Capital has warned.

“The introduction of global minimum tax meant that the island lost one of the advantages to being in Bermuda,” said Nicolas Papadopoulo.

Mr Papadopoulo was speaking to a full house at the Association for Bermuda Insurers and Reinsurers Risk Forum held at the Hamilton Princess and Beach Club.

Bermuda introduced the Corporate Income Tax last year, a 15 per cent levy on the profits of multinational enterprise groups with annual revenue of 750 million euros ($875 million) or more. The move was in response to the Organisation for Economic Co-operation and Development’s global minimum tax initiative.

Mr Papadopoulo said Bermuda was already a high‑cost jurisdiction and that the new tax regime was an added headwind.

“Certainly, the cost of doing business in Bermuda is more than what it is if you form a company in the United States,” he said. “Now that Bermuda is subject to the global minimum tax you, by definition, lost one of the advantages to being in Bermuda.”

He warned that the cost of doing business could become “prohibitive” to insurers and said Arch and other firms have been pressing this message with policymakers.

“We had many discussions with the Government to express that one of the risks for Bermuda is that the cost of doing business here is becoming prohibitive,” Mr Papadopoulo said. “The Government has heard us. Some of the tax credits they implemented respond to that need.”

The panel on safety and soundness in the insurance market also addressed the protection gap in the United States and the role Bermuda plays in supporting US insurers.

Scott White, president of the National Association of Insurance Commissioners, underscored Bermuda’s importance in tackling growing shortfalls in cover, particularly for natural catastrophes, property risk and cyber.

Mr White said the US property market is under pressure from a combination of climate‑driven natural catastrophe losses, inflation in labour and materials and volatile energy prices.

“You start with climate risk, increased frequency and severity around catastrophes,” he said. “When you add to that the increased inflation impacting the cost of labour and materials, that is a big factor. We are seeing with this heightened geopolitical volatility that energy prices will continue to rise and further contribute to that.”

In that context, Mr White said Bermuda’s capacity is all the more important for American insurers.

“That makes Bermuda’s role all the more important in terms of bringing more capacity to the US insurers,” he said. “That allows companies to write more policies, hopefully at a lower cost”.

Mr White described Bermuda as playing a strong role in ensuring that US insurers have stable markets and in addressing multiple types of protection gap.

“Bermuda plays a strong role in terms of capacity in ensuring that we have stable markets to address protection gaps that exist not only in the property insurance space but also in retirement and cyber,” he said.

He also highlighted Bermuda’s importance in the rapidly evolving cyber market, where many US carriers are wary of writing high limits, noting that Bermudian reinsurers have the modelling capability and capital structures needed to assume larger cyber exposures that primary insurers may be uncomfortable retaining.

“Many US insurers do not really understand cyber enough to want to write high limits,” Mr White said. “When you go to Bermuda they have the modelling and capital structure. They can step in and really help absorb some of that cost.”

For US regulators, he added, Bermuda’s contribution to both natural catastrophe resilience and cybersecurity sits squarely within the NAIC’s wider priorities on protection gaps, risk mitigation and the safe use of data and technology.