Bermuda's insurance industry could be set to boost its volume of premiums written in the future.

That is the view of Roger Gillett, chairman of the Bermuda Insurance Development Council (IDC), who believes the rise in gross and net premiums written on the Island from 2005 to 2006 as reported in the Bermuda Monetary Authority's (BMA) latest report could be set to continue.

Mr. Gillett, who was talking about the findings at the Risk and Insurance Management Society (RIMS) 2008 conference in San Diego last week, sees Bermuda-based re/insurance companies as well-placed to deal with any natural disasters which may occur with the hurricane season on the horizon, despite currently being in an ever softening market.

"I think the big point of interest from the numbers released by the BMA was the incredible increase in premium volume from 2005 to 2006," he said.

"That increase is not surprising to us because we knew that 2006 was a very active year - it was a year in which a number of new companies arrived on the Island, but also a year in which the existing Bermuda companies were thriving, particularly because of the shortage of capacity for property risks in the US."

And Mr. Gillett reckons the big increase in capital and surplus in Bermuda from $110 billion in 2005 to $158 billion in 2006 was significant.

"Historically premium ratings have roughly matched capital and surplus," he said.

"If you look at 2006, premium was considerably higher in capital and surplus."

Meanwhile he perceives that trend is likely to remain the status quo in forthcoming years.

"As we look forward the numbers are likely to show us, I think what you can expect to see is that there will be a continued growth in gross premiums probably to $125 billion," said Mr. Gillett.

"Even though the market has softened, all of those companies that were new in 2006 have continued to grow and others have arrived.

"You see some of the side cars, as they were designed to do, have exited the market.

"The premium volume will have increased, but not to the same volume as 2006.

"As far as capital and surplus volume is concerned it was still a good year, so you can probably expect that to grow to $200 billion."

Broken down, the category 1 and 2 re/insurers combined slightly decreased between 2005 and 2006, but category 3 re/insurance companies, some of which were captives, increased, partly due to category 2 firms upgrading to category 3 status, said Mr. Gillett.

"There is a very healthy ratio of capital and surplus to gross premiums," he said.

"I do not see anything that is going to disturb the trend - there are going to be some years that we grow less than other years, but that is natural enough given the cyclical nature of our industry.

"The big question is 'Are there going to be any more catastrophes this year?', particularly as we approach the hurricane season.

"Bermuda companies are well positioned to withstand any catastrophes that may occur and Bermuda has ultimately benefited from the tougher years from the claims payments standpoint.

"But being in a soft market does mean that companies have to look out for premium sources and companies need to identify areas where they can enter the business and make money and I think that will be a very considered approach."