The impact of the September 11 terrorist attacks on Bermuda’s business landscape was transformational. Twenty-five years on, the ripple effects are still plainly visible in the island’s re/insurance marketplace.

Initially, it was a story of loss — loss of industry lives and financial losses in the form of massive claims that some Bermudian insurers took on the chin. Brokers Aon and Marsh alone lost a combined 471 employees who were in the World Trade Centre that day.

The Bermudian insurance giants of the time, Ace and XL, ultimately absorbed about $1.6 billion in net losses between them from the September 11 attacks — roughly $650 million at Ace and $950 million at XL.

In the aftermath came the response — a wave of new companies and capital in Bermuda that filled the gaping hole in capacity left by an event that had seemed scarcely imaginable beforehand, and which caused deep losses across a range of insurance lines.

And it was that very breadth of losses in different types of insurance from a single event that made 9/11 different from previous events that had sparked new company formations in Bermuda.

The liability insurance crisis of the 1980s that led to the birth of Ace and XL, and Hurricane Andrew in 1992, which heralded a slew of catastrophe-focused reinsurers including RenaissanceRe and PartnerRe, were both responses to a market dislocation of one type of coverage.

Among the lines hit hardest in 2001 were property, business interruption, aviation, workers’ compensation, life, accident and health, liability, event cancellation, terrorism, and reinsurance of all the aforementioned.

Swiss Re’s research estimated the 9/11 total insured losses at about $40 billion in 2001 dollars, roughly equivalent to $75 billion today. Lines taking the biggest hits were property/business interruption (33 per cent), liability (23 per cent) and aviation (11 per cent).

The ensuing spike in demand for insurance capital was not only because of the scale of claims, but also because of a new-found awareness of a single-event, multi-line risk that had previously been difficult to contemplate.

Rates for many types of insurance soared and the broad nature of the opportunity sparked the creation of new breed of Bermuda insurer, born diversified.

John Huff, chief executive officer of the Association of Bermuda Insurers and Reinsurers, was working for a reinsurer at the time of 9/11. Just five days before the planes hit the twin towers, he had attended a lunch meeting at the Windows on the World, a complex of restaurants more than 100 floors up in the North Tower.

Bermuda’s response at the time reinforced its emerging credibility as a re/insurance hub, Mr Huff said.

“It was so important that Bermuda absorbed the historic losses from 9/11, paid its share and stood with the American people,” Mr Huff said. “It helped to build confidence in the system.

“And then we saw an aggressive injection of new capital that restored market capacity and largely took place in Bermuda. The companies that set up included Arch Capital, which is today part of the S&P 500, as well as Axis Capital, Allied World, and Endurance, which is today part of Sompo.

“These are powerhouse companies that were born out of the tragedy of 9/11.”

The new diversified Bermuda model that emerged amid the start-ups was epitomised by Axis Capital.

In December 2001, John Charman, the founding chief executive officer of Axis, told The Royal Gazette: “The whole concept of Axis was not creating an opportunistic response to the tragic events of September 11 by way of reinsurance. It was actually creating something that I don’t think Bermuda has really seen yet, which is a combination of a major reinsurer aligned with a global specialty insurance business.

“And that gives us long-term viability because it then becomes a value-added business through the different cycles that naturally occur in the commercial world, let alone the insurance world.”

Rory MacGregor, Axis’s head of underwriting, global markets, joined the company in January 2002.

Speaking in a series produced by the company to commemorate its 25th anniversary, he recalled that within a year, the team had built a significant portfolio across specialist risks, especially in terrorism and aviation where the need was most acute. He added that work was about much more than growing volume.

“There was a real sense of purpose,” Mr MacGregor said. “We knew what we were building mattered, for the long term.”

With clean balance sheets unencumbered by legacy issues, and a hard market across multiple lines, the Class of 2001 was able to make a strong start.

“Clients were so concerned about the solvency of existing carriers that they wanted new, unencumbered players to come in,” Mr Charman recalled at the tenth anniversary of 9/11.

“We achieved in two years what it took Ace and XL 15 years to do. That was the nature of the opportunity.”

Not only did the new companies bring capital, jobs and prosperity to Bermuda, they brought a broad range of expertise. It was a game-changer for the market.

Caroline Foulger, non-executive chairwoman of Mosaic Insurance, said in 2011 when she was insurance leader for PwC Bermuda: “This was the largest of the ‘Bermuda waves’ in terms of both capital dollars and number of new starts and catapulted Bermuda into the group of top three reinsurance jurisdictions and the cat risk capital of the world.”

The significant boost in both reputation and scale enabled by the Class of 2001 turned out to be “a key contributor to international business in Bermuda and the related economic growth of our country”, she added.

Diversified underwriting has increasingly become a feature of the Bermuda market since 9/11. Beyond the property-catastrophe coverage that the island is still best known for, the market today covers a wide variety of specialty risks, from climate and mortgage risk, to political violence and cyber-risk.

Re/insurance has become the largest driver of Bermuda’s economy and an employer to hundreds of Bermudians, with Abir estimating that about 70 per cent of its member companies’ employees are local.

For Bermuda, it is clear that 9/11 was a pivotal moment in the island’s economic history.