Tawana Tannock told delegates at the Bermuda Captive Conference the story of how Bermuda has emerged as a leader in the maritime liability reinsurance business.

The managing director of the Skuld Bermuda companies described how the island’s regulatory framework and strong captive sector had made the island the jurisdiction of choice to find solutions to the maritime industry’s insurance challenges.

“We at Skuld are part of one entity in Bermuda that reinsures 90 per cent of the world's ocean-going tonnage,” Ms Tannock said.

She explained that Skuld Mutual Protection and Indemnity Association (Bermuda) Ltd is a member of the International Group of P&I Clubs, whose 12 members pool their risks into the Hydra Insurance Company Ltd, a captive reinsurance vehicle.

Ms Tannock is president of the board of Hydra, which is a Bermuda-incorporated segregated account company. Under Hydra’s structure, each of the 12 clubs has its own segregated account, or cell, ring-fencing its assets and liabilities.

Through using the captive structure, the clubs can retain premiums that would otherwise have been paid out to commercial reinsurers.

“We realised that one of the ways we could utilise not only the Skuld structure, but also the Hydra structure, was to look at what's really expensive in the reinsurance market and retain that risk,” Ms Tannock said.

One example she gave was coverage of crew issues under the Maritime Labour Convention, which requires shipowners to guarantee compensation for seafarer repatriation, outstanding wages, and long-term disability or death arising from their work.

Many ships have been stranded by the closure of the Strait of Hormuz this year as a result of the Iran conflict, bringing crew welfare into sharp focus.

“We write that business in Bermuda because it’s cheaper than writing it on the open market, and we do that for a couple of other areas as well,” Ms Tannock said. “This is one of the things Bermuda has been useful for as we keep evolving.”

She described how geopolitical trends and events, as well as regulatory changes had been catalysts for changes in the way Skuld has done business over decades.

For example, Cold War tensions led Skuld to make contingency plans in 1978, leading to the establishment of the company’s Bermuda operation in the year the Insurance Act was implemented. Economic substance rules introduced by the Bermuda Government encouraged Skuld to build out its footprint on the island.