Under the banner 'Risk: The New paradigm', last week"s 16th International Reinsurance Congress focussed on the ways in which September 11 and the advent of a hard market in the property and casualty sector have affected the insurance and reinsurance industry worldwide.

Premier Jennifer Smith opened the conference at the Fairmont Hamilton Princess, as she has in each of her previous years in office. She enumerated the advantages Bermuda offers the re/insurance industry: an efficient but demanding regulatory environment, a partnership between the private and public sectors, and the simple fact that Bermuda has become the domicile of choice for the insurance and reinsurance markets.

The Premier appeared to relish the opportunity to address an audience she had inadvertently kept waiting for 40 minutes, when she was driven by mistake to the other Princess Hotel in Southampton. She drew interesting comparisons between the first Congress, when Bermuda was a less well-known jurisdiction and looked forward, she said, to being invited to address the 17th next year.

With the formalities out of the way, the Congress itself began with a sombre analysis of the prospects for the re/insurance industry, delivered by Robert Partridge, managing director, financial service ratings, at Standard & Poor"s. Mr. Partridge replaced the scheduled Donald Watson, who has joined ACE here in Hamilton.

Mr. Partridge explained that, despite the current hard market, his agency's outlook for the re/insurance industry is negative. S&P has downgraded its rating on 16 reinsurers and called into question the ratings of the remaining AAA-rated companies. "Capital adequacy will be strained this year and next," he said.

Not all the news is bad, however, Mr. Partridge said. "The industry has demonstrated impressive resilience and (levied) eye-popping increases in premium rates," he said, adding that terms and conditions have tightened, many companies have returned to writing excess of loss, enterprise risk management has achieved a greater predominance, and the hard market is expected to continue into 2003 and 2004.

What, then, informs S&P's negative outlook? Reserve developments in asbestos and workers' compensation, rising payouts for directors' and officers' insurance, the state of equity markets, record corporate defaults and the low interest rate environment, Mr. Partridge said.

Whether the industry's glass is half full or half empty, then, would appear to depend on its geographical location. The London market, the North Americans and the Europeans all have structural and legacy problems that would appear to justify Mr. Partridge"s gloomier caveats. The Bermuda sector, though challenged by the state of world markets, clearly faces lesser challenges.

A panel of reinsurance buyers then joined Mr. Partridge. Their basic conclusion was that the industry is trying to modernise its data systems, with the corollary that the customer will have to pay for it. A fear of sharing data with competitors and the risk of commoditising information were the predominant topics of discussion.

Later on that first afternoon, another panel convened to share its thoughts on the asbestosis situation. The enormous potential cost of claims some estimates reach as high as $275 billion and the need for tort reform dominated this conversation.

On Thursday, the keynote speaker, William Bratton, began the day. Mr.

Bratton has recently been appointed Commissioner of Police for Los Angeles, having previously served in a similar capacity in Boston. Mr. Bratton"s topic was terrorism, and he prefaced a panel discussion on the subject with a lengthy history of policing since he first walked the beat, back in the 1960s.

"Like more traditional crime, terrorism can never be totally prevented, the risk can never be totally eliminated, but the fear and potential can be significantly identified, controlled and reduced," he told a rapt audience.

Mr. Bratton later flew from Bermuda to Los Angeles, for his confirmation hearings. Since many consider today's LAPD to be something of a terrorist organisation itself, his comments were timely.

"Within six months to a year, you will see the crime statistics go down in Los Angeles dramatically," Mr. Bratton claimed. Time will tell.

The litigiousness of the United States and the abandonment of common sense in that country's legal system - the Congress being held just days after a single smoker was awarded $28 billion in damages against the company that quite legally fed her habit - have made underwriting something of a lottery. Heaven help the publishing industry, for example, when the first reader successfully sues for the deterioration of his or her eyesight brought on by reading a newspaper every day.

The balance of Thursday was given over to a discussion of the relative merits and demerits of the London and Bermuda markets, the latter unsurprisingly emerging as the strong favourite. Lloyd's is adrift in seriously choppy waters, its pre-eminence a thing of the past.

Friday's attendees heard highlights from a landmark report issued that day on the efficiency of property and casualty insurer receiverships in the United States, a report prepared by Dr. Robert Klein and others at Georgia State University. The mechanics of how an insurance company can be placed in bankruptcy are happily of little more than passing interest to most Bermudian insurance people. With only the odd exception, Bermuda's natural advantages and concentration of intellectual capital, as enunciated by the Premier at the start of the Congress, protect buyers of insurance and reinsurance.

The conference, it was agreed, was a success. Sponsored by Hawksmere, in association with PricewaterhouseCoopers, it is among the oldest and most vibrant of the Bermuda industry's get-togethers. Its continuing success says as much for Bermuda as it does for the efficiency of its organisers. Next year's conference will be held at the same venue, so no one next year will have an excuse for being anywhere else when the 17th Congress gets under way.