Bermuda's insurance sector is old enough to have developed some lengthy traditions. One such is the International Reinsurance Congress, the 16th incarnation of which will be held at the Fairmont Hamilton Princess from October 9 to 11.

The Congress is put on by accountants PricewaterhouseCoopers (PwC) and the London firm of Hawksmere. "Bermuda 16", as this year's conference is known, will focus for three days on the most fundamental topic of all in the insurance world. The theme is: "Risk: a new paradigm".

After the events of September 11 last year, risk managers' first thoughts were that the nature of risk had changed. Most insurers and reinsurers had never seen themselves as being in the business of underwriting for so inhuman an activity. "Natural perils", as the industry terms them - earthquakes, landslides, hurricanes and so forth - were terrible events, for which, at least, frequency and severity could be measured and extrapolated. Careful study of the long history of floods, for example, leads to the to capacity of estimating the frequency and severity of flooding, and consequently the ability to price insurance against them.

The events of September 11 were outside the frame of reference on both grounds:

Frequency. In the continental United States, such an event had never occurred.

Floods such as those that wracked Europe this summer are collectively referred to in the insurance industry as a "once in 100 years" or a "once in 250 years" event. An attack leading to the loss of life in North America such as occurred on September 11, 2001, had never happened, in peacetime or in war. (Pearl Harbor is in Hawaii, not the continental United States).

But on September 11, such an event did happen, reducing such unspeakable behaviour, at one level, to the category of the measurable. To date, mercifully, the attacks remain a "once in a lifetime" event.

Severity. Broadly speaking, catastrophes affect either property or life. The cause is the uneven distribution of insurance cover worldwide and equally uneven building codes.

Better developed countries - the United States is the classic example - tend to have both more modern buildings and greater insurance coverage. If property is damaged, the loss of life is usually mitigated. Less developed countries - Bangladesh is unhappily a good example - suffer greater loss of life and property simultaneously, but generally carry less insurance coverage.

The events of September 11 resulted in the loss of a considerable number of insured lives and one (or two, depending on how one counts) of the world's most expensive buildings. Such an outcome is known in the insurance industry as a "clash" between business lines, i.e. between the life sector and the property and casualty sector, and is rare.

No wonder risk managers were struggling, in the early days after the event, to define how risk had changed. As the insurance industry gathered itself, it became clear that the dangers posed by terrorists had always been there, but the likelihood of their committing an outrage of this nature had always been considered slim anywhere, but especially in the continental United States.

The industry conclusion was that the nature of risk had not changed; the perception had. The rules of the game had shifted. A new paradigm was needed.

"Over the past 16 years, the International Reinsurance Congress has watched over, commented upon and even forecast some remarkable changes in the reinsurance industry," said a Hawksmere spokesman. "All previous changes and developments pale into insignificance, however, in the light of the events of September 11 in the US and the repercussions in the global insurance industry."

Hence the keynote speaker at Bermuda 16, on Day Two, Wednesday October 10, will be William Bratton, the former New York City Police Commissioner. Mr. Bratton will take as his topic: "Terrorism: the time is now" and will answer the questions:

What kind of risks are we facing now?

What kind of risks should we expect to face?

What is the impact of these risks on business, organisations and our own lives?

Following Mr. Bratton's presentation, a panel led by him will discuss "the new dangers, which of them are insurable, by whom and at what cost?" Ty Sagaline, head of AIGs cyberterrorism unit, will be on the panel.

That afternoon, both Lloyd's and Bermuda will come under the spotlight in separate panel discussions. Bronek Masojada, deputy chairman of Lloyd's, will lead the first session, and locals Tony Taylor, chief executive officer of Montpelier Re and Bob Cooney, chief executive officer of Max Re will be among the panel.

The conference chairman, Ray Medeiros of PwC, will formally open Bermuda 16 in time-honoured tradition, after lunch on Day One, October 9, by introducing the Premier of Bermuda. In her traditional welcome, Jennifer Smith has often painted an interesting portrait of Bermuda for visitors in the audience, and taken the opportunity to express her support for the island's insurance and reinsurance industry.

A panel discussion on asbestosis will also take place on Day One. The discovery of the ill-effects of asbestosis has led to a seemingly endless series of crises for the insurance industry, and this year another has arisen. In what US Attorney General Griffin Bell described as "jackpot justice", asbestos-related suits have been "inundating courts and dumbing down the US legal system," in his words. More than 500,000 claims are pending and estimated total losses so unpredictable that they range up to $275 billion.

The third day of the conference will look at US insolvencies and receiverships, as well as "seller's remorse", a hot topic since premiums in the property and casualty sector have risen so steeply.

Registration for Bermuda 16 can be achieved online at www.hawksmere.com/bermuda