Employment in the Bermuda international insurance industry is being hotly debated right now because of the new companies which have established here.

As a word of caution to all of those not directly involved in the insurance industry, please do not play politics with a very sensitive subject.

Many of the new insurance companies are at their wits end about how to tackle the shortage of "qualified" employees needed for this very critical stage in the insurance industry.

There are several reasons why the insurance industry globally, not just in Bermuda, is having a very difficult time finding "qualified" employees.

The insurance industry is facing challenges it never dreamed possible. September 11, 2001 set off a domino effect across the insurance industry and the economy.

Therefore, the industry is being forced to have to find a balance without the assistance of good investment results to offset poor underwriting results.

Many insurance companies are going back to the drawing board to ensure they get adequate policy terms and conditions so they can stay in business. According to the April 15, 2002 issue of Business Insurance, "the property/casualty insurance industry suffered its first-ever net loss last year, according to an estimate released Monday by the Insurance Services Office and the National Association of Independent Insurers.

The industry's net loss after taxes reached $7.92 billion last year, compared with net income of $20.56 billion in 2000.

The combined ratio for the industry hit 116.0 percent last year, deteriorating from 2000's 110.1 percent combined ratio.

The losses reflected both the claims stemming from the September 11 terrorist attacks and sharply lower returns on investments."

On June 26, 2002, Business Insurance quoted John Kollar, vp for consulting and research at ISO in Jersey City, New Jersey, as saying, "low interest rates and weakness in stock market year to date suggest that investment results may continue to deteriorate for some time to come."

On July 2, 2002, Bestwire quoted Robert Hartwig, chief economist with the Insurance Information Institute, "all the pressure is on pricing and underwriting now, because there's very little help in the investment side."

With the declining stock market and losses which are still developing as a result of September 11, 2001, insurers are looking to old school underwriters who have weathered many hard markets to try to help them to "underwrite" again.

Hiring unseasoned underwriters at this time in the insurance cycle is like playing Russian roulette.

Insurance companies can not afford to hire people who can not hit the ground running.

They need underwriters who know how to price an account, set the right terms and conditions including knowing what exposures to exclude and setting appropriate retentions and limits. A college graduate or a newly trained underwriter would not have the necessary skill set and may be taken advantage of by markets looking for na?ve capacity.

This problem is not unique to Bermuda. Insurers globally are having problems finding underwriters who understand the implications of a hard market and know how to effectively underwrite through one.

The insurance industry is coming off nearly 13 years of a soft market. This means those underwriters who came into the industry after 1989, have never experienced a hard market.

They have to be retrained to know how to function in this type of market.

To bring in another batch of "unqualified" underwriters would be a huge mistake and could be very costly to insurers in the long run.

What Bermuda needs to do is allow "key" underwriters on the island during this critical stage with the caveat that they are here to help both the new and incumbent insurers to make it past the hump.

Once the hump has been cleared, then, these underwriters should take an unseasoned underwriter under their wing to train him.

Sending untrained underwriters, whether Bermudians or non Bermudians, in at a time like this would be an unwise move because we don't want a repeat of the early 1980s.

In the late 1970s and early 1980s, a group of na?ve underwriters responded to a change in US tax laws and wrote everything that came across their desks.

This lack of underwriting discipline led to the demise of third party captive business in Bermuda and left a bit of a smudge in Bermuda's history as a domicile of choice for insurance.

While all eyes are on us because of the huge amount of capital that has come to our shores as a result of dire worldwide events, we must make sure the people that are chosen to run these companies and to underwrite accounts are of the highest calibre.

In the July 2002 Reactions magazine, Wilheim Zeller, chief executive of Hanover Re in Germany said the new Bermuda companies lack focus because they are trying to write all lines of business.

We must be careful to send out the right message.

The only way we can do this is to be sure we have good underwriters writing the business coming on the island.

I can understand the growing concern that some Bermudians are not getting jobs in the industry but let's understand why.

The Bermuda insurance industry is taking front and centre stage and those Bermudians who can hold their own on that stage are already in positions to do so.

It's up to them when the time is right to reach down and help those neophyte underwriters to find their place in the industry.

Playing politics with this issue is like playing with dynamite.

It's not an issue that can be solved easily because we are dealing with global dynamics.

The new players that have chosen to set up in Bermuda are creating a wealth of opportunities for Bermudians that we could not have dreamed possible even a year ago.

Now we need to give them the breathing space to become established markets in the global insurance marketplace.

When these companies establish the resources they need to function effectively and professionally in this market, only then will they have the flexibility to take on trainees.

And only then will the trainees get the attention they need to develop into sound underwriters.

It's then that we should be concerned if Bermudians are still being overlooked for jobs.