Bermuda needs to be careful that new capacity in the insurance market benefits the infrastructure of the Island, according to Chairman of the Bermuda Insurance and Reinsurance Brokers Association (BIRBA) David McManus.

Mr. McManus, president of Gallagher Re, said Gallagher is experiencing unprecedented growth in each of the company?s business core strategies, insurance, reinsurance and captives.

?The biggest driver is reinsurance and there are two things driving that. One is Bermuda has become the reinsurance centre of the world and that is a trend that started in the mid 1990s and continued with 9/11 and Hurricane Katrina.

?This shows that insurance capacity that persists here is reinsurance. Insurance capacity tends to be feast or famine, may be two years of feast and five years of famine where the capacity builds up after an event for such as 9/11 for insurance.

?Within a couple of years the capacity originally created here moves on to an onshore platform and what remains here is the last risk management business, high access casualty business so the insurance side tends to be pretty volatile.?

He said the reinsurance industry has been constant and dramatic and Bermuda will remain a captive and reinsurance centre with opportunistic and specialist insurance capability.

Whether Bermuda can sustain this capacity in the long term is question that Mr. McManus says impacts Bermuda generally.

?I firmly believe Bermuda can, but like questions of sustainability we need to be very careful and plan how to maintain that,? he said.

?We have to attract the right sort of products and people and not get into the wrong things, things that are very labour intensive and put a strain on the infrastructure, schools, transport and housing that come from an imported industry.

?If we do it right, we will have a balance of bringing in very specialist people operating at the cutting edge, negotiating the deals and providing expert underwriters and placers of business.?

Mr. McManus also believes there will be opportunities for certain middle specialist support roles but there isn?t room in Bermuda to facilitate a huge administrative support infrastructure.

?This gives Bermudians an opportunity to come into the industry if they have a good education, and a willingness to go overseas to obtain experience and be well prepared to come in at entry level,? he said. ?If you have that experience the world can be your oyster.?

With the insurance industry being volatile, the challenge for underwriters is to justify placing quality capacity here in Bermuda and underwriters need to have good flow of business to support that underwriting activity.

?To make that work brokers have to be capable and the value proposition has to work so that there is a value brought by the Bermuda broker to the underwriter ? and the insurance carrier continues to put quality staff in ? and then the brokers can grow the product line.

?The problem is that, if the carriers move the capacity onshore because it is more efficient, then brokers are concerned about staffing up for a business opportunity that will last two to three years at best.?

Mr. McManus said the insurance side of the industry is not growing in Bermuda and if it is, it is not growing dramatically.

?Bermuda needs to answer how much of our insurance industry is taking place in Bermuda and is it benefiting, in a positive way, to this economy and this community,? he said.

He said Gallagher?s own experience of premium growth over the last two years from insurance products supports this belief and many of his colleagues in the industry support this view.

?The challenge is that if there is a sudden burst in capacity in the insurance side, the brokers have to be ready for it or they will miss out on it,? he said.

?This volatility on the insurance side is something we in BIRBA would like to work more closely with insurance carriers to solve.?