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Bermuda positioned for key role in climate risk finance

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Bermuda is well-positioned to become a leading jurisdiction in the growing market for climate risk finance, the chairman of the Bermuda Business Development Agency has told an international audience.

Stephen Weinstein is the former chief legal officer at RenaissanceRe Holdings Ltd, and a member of the board of trustees of the Bermuda Institute of Ocean Sciences.

Speaking to Newsweek magazine’s Country Reports section, for a story titled “A country always punching above its weight”, Mr Weinstein was bullish about the island’s re/insurance market, which he called “the most vibrant and dynamic in the world”.

He added: “We are very excited about Bermuda expanding in the most adjacent space to natural catastrophe insurance: the growing market for climate risk finance.”

Mr Weinstein highlighted Bermuda’s “regulatory sophistication, flexibility and speed to the market” for products and services. He is convinced that the next wave of innovation for the climate risk finance should be done in Bermuda.

Mr Weinstein said: “The world’s biggest problem, once we put the pandemic behind us, is the global risk of climate change. Climate change, apart from the obvious risks to health and biodiversity, accordingly entails significant financial risks to businesses and governments.

“At the same time, climate change is giving rise to the world’s biggest investment and business opportunities. Bermuda, with its decades of strength in natural catastrophe risk management, has built a critical mass of highly relevant human capital and talent as well as the ideal regulatory environment to oversee and support this sector.”

In the report, Mr Weinstein said Bermuda was ideally positioned to emerge as the climate risk capital and “to play a disproportionate role in climate solutions and adaptation”.

He added: “As a market, Bermuda has invested in a superior understanding of climate-driven perils like wildfire, tropical windstorms or flooding.

“No one understands the risks of warming waters, or exposed structures and communities, better than the experts in the Bermuda reinsurance market. No one has a better track record of honouring their claims promises than the companies here. The historical default rate in Bermuda is literally zero.”

He said that not only was Bermuda the best place to domicile climate risk-focused businesses, it is one of the best places in the world to study the effects of climate change.

Mr Weinstein explained how Bermuda is situated on a “a unique seamount” in the deep ocean and near the Sargasso Sea and the Gulf Stream. For more than a century the island has been home to the Bermuda Institute for Ocean Studies.

He said: “BIOS is perfectly located for and is the only custodian and proprietor of an extremely important series of measurements. For decades, scientists have set sail from Bermuda to go out in the ocean to maintain a continuous time series of key ocean measurements, which is shared worldwide.”

Mr Weinstein said BIOS is also committed to education, adding that students and interns “learn skills from statistics to numeracy and project management”.

Bermuda has other environmental projects, organisations and initiatives, and Mr Weinstein said: “Overall the culture of climate is so strong in Bermuda, and part of what makes it a great place to operate and pursue climate innovation.”

Stephen Weinstein, chairman of the Bermuda Business Development Agency (File photograph)
Bermuda Institute of Ocean Sciences (File photograph)

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Published April 12, 2021 at 8:01 am (Updated April 13, 2021 at 8:56 am)

Bermuda positioned for key role in climate risk finance

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