Bermuda's insurance and reinsurance industry has played a major role in the US economy since the turn of the century, according to the latest report by the Association of Bermuda Insurers and Reinsurers.

The study, entitled 'Analysis of the US Economic Impact of Bermuda based Insurers and Reinsurers' and carried out by GSP Consulting Corp based in Pittsburgh Pennsylvania, revealed that the Island's firms employ 9,600 Americans directly in the US and indirectly generate 95,045 jobs.

It also claims Bermuda's re/insurance sector has paid out $17 billion in property claims in 2005 for hurricane damage, representing 25 percent of the total property damages covered.

The findings, which were released last month, calculate that Bermuda's insurers provided enough funds to replace 87,042 homes (based on median home values), including 45,419 homes in Louisiana and more than 24,000 in Mississippi.

The Island's insurers also helped 14,170 people return to work in 2006 due to claims paid out in the wake of Hurricane Katrina, made up of 9,564 in Louisiana and 4,607 in Mississippi.

In terms of reinsurance, Bermuda-based reinsurers protect four out of 10 US homes and businesses with property coverage, while accounting for 40 percent of the hurricane and earthquake reinsurance coverage in the Stateside as well.

Furthermore, they total 26 percent of the US reinsurance market as a whole, generate as much as $96 billion of the gross output for the US insurance market and write 57 percent of the total crop insurance and reinsurance market in the States, most notably supporting an estimated 50,619 farms in Iowa, 36,684 in Kansas and 33,556 in Indiana.

The report reads: "Insurance plays a key role in the economy of the United States.

"In addition to a stable source of employment, the industry provides products and services that protect businesses and individuals from catastrophic losses.

"These risk management products directly support the growth of US businesses, most of which could not operate without insurance coverage.

"The assets of the insurance firm not only serve this risk mitigation and stabilisation function, their access to low cost capital positions them to provide US business owners with attractive financing to further enhance their long-term growth strategies."

It focuses on the part it plays in reinsurance coverage in the US, with data from the Reinsurance Association of America showing that Bermuda domiciled firms accounted for 28 percent of the total market last year, while the Island's re/insurers lead the way for coverage from hurricanes and earthquakes, making up 40 percent of the US marketplace.

Total US premiums ceded by Bermuda-domiciled companies have almost doubled from $15 billion in 2001 to $27.5 billion last year, which compares favourably to the US itself, which only inched up by just more than $1 billion from $41.6 billion to $42.9 billion over the same period.

The risk management product that insurance produces is directly or indirectly consumed by virtually everyone in the US from helping homeowners and automobile owners pay for minor repairs to helping rebuild whole neighbourhoods levelled by a devastating natural disaster.

In real terms, Bermuda firms comprised a gross output of $15.5 billion in 2002 and $28.1 billion in 2005, but given their role in the reinsurance and property and catastrophe lines, they may actually account for as much as $96 billion of the gross output for the US insurance market. Meanwhile, their share of net premiums grew from 3.4 percent five years ago to 4.7 percent in 2005.

The report continued: "Given the scale of Bermuda's role in the reinsurance and property catastrophe markets, the estimate does not begin to capture the scale of the contribution of Bermuda insurers and reinsurers to the US economic output.

"The specialisation of Bermuda firms in reinsurance is a critical piece in the overall inter locking system of risk management that sustains economic growth in the world today.

"Insurance and reinsurance are not static tools, but rather integral parts of a flexible system that has allowed the US economy to recover from significant catastrophes.

"Experts predict that worse storms and more expensive natural disasters are likely to occur in the near future.

"These predictions should cause the insurance industry, its stakeholders, and regulators to cautiously proceed with changes to existing programmes or structures."

Other highlights of the report include the impact the Island's insurance and reinsurance industry has had on maintaining the stability of the US economy in the wake of natural disasters and other external disruptions, such as one that creates economic consequences, a credit crisis or market collapse.

This is reflected in the figures from 1989 to 2005, which reveal catastrophes in the US caused more than $450 billion in property losses, and yet, the overall economy kept up a positive annual performance and solid year-on-year growth through the entire period.

It was not until 2001 that the terrorist strikes of 9/11 and other economic forces combined to derail the economy, but as growth returned, the worst two years of catastrophes in 2004 and 2005, generated only a small decline in output growth, said the study.

As some regions are still overcoming the impacts of Hurricane Katrina, it is hard to imagine how much more long-lasting the destruction would have been if the Bermuda re/insurance sector was not there to pay out more than $17 billion in claims, it concluded.

Focusing on the US job market, Bermuda domiciled firms have a total of 9,600 Americans on their books, leveraging an additional 95,043 jobs in states like Pennsylvania, New York, Connecticut, California and Gerogia.

Compared to other sectors, insurance fares better in terms of the number of jobs it creates, both directly and indirectly, than management, health services and colleges and universities, but is behind information services.

Out of the top industries that supply the insurance industry, insurance agencies and brokerages make up the lion's share at 7,209, followed by insurance carriers and securities, commodity contracts and investments at 1,118 and 1,081 respectively.

Turning to the role of Bermuda insurers and reinsurers in the 2005 Hurricane recovery following hurricanes Katrina, Rita and Wilma, the Island's companies provided more than $7.3 billion for residential property damage, with Louisiana and Mississippi making up more than $5.6 billion of that total alone. That equates to a grand total of 87,042 homes relaced by Bermuda firms, the aforementioned states accounting for 69, 558 of those.

There are an estimated 275,00 homes that need to be replaced as a result of the storms and the Island's re/insurance industry is providing funds to meet 32 percent of that need.

They also provided almost $4.7 billion that was paid for business-related claims in Louisiana and $2.1 billion in Mississippi, which is a sizeable chunk where compared to other insurers and reinsurers, who provided about $15.8 billion and $8.3 billion to the two states respectively, allied to a 10 percent and 11 percent share of the business recovery assistance to both.

The economic impact of the average Bermuda-domiciled insurance and reinsurance firm on US operations equates to 400 jobs ($94.6 million output) created directly for Americans and 585 ($86.3) indirectly, with 3,307 ($402.7) induced and totalling 4,292 ($583.6).

Over the states, US employees of Bermuda firms total 2,053 for Pennsylvania and 1,744 in New York.

Crop insurance is another vitally important part of the US economy, with Bermuda companies representing a 27 percent share of the insurance of such products at $1.3 billion out of $4.9 billion.

Broken down, the Island's businesses make up $15 million of $26 million in Arkansas, $27.1 million of $47.6 million in Colorado and $55.9 million or $98.4 million in Indiana.

Bigger totals include $116.6 million of $205 million in Iowa and $148.7 million of $261million in Kansas.