Since last September, the changes that have taken place on Bermuda have been astonishing - almost impossible to keep track of. New reinsurers have set up on the island, new capital has been invested in the existing businesses, and many well-respected market practitioners have relocated to become involved in the Bermudian scene.
With the massive changes inevitable in the re/insurance industry post-September 11, Bermuda was always going to be a front-runner in the industry transformation race. It had already proved its colours over two previous capacity crises - the US liability excess problems of the 1980s and the property catastrophe crunch post-Hurricane Andrew - and had changed from being a jurisdiction focused on specialty business to a major player on the worldwide stage.
Bermuda's fast and flexible regulatory regime also gave the island an advantage over other domiciles. In recent years it has received a clean bill of health in various reports on offshore jurisdictions, but in order to emphasise its status, recently the oversight of regulations moved from the Registry of Companies to the Bermuda Monetary Authority. Another change in the regulatory regime last year was the enactment of legislation for segregated cell companies, which will be extended further this year to include additional industry to the insurance sector.
The past year has also seen the rise in use of digital signatures, which enable electronic documents to be binding without the need for a physical signature. This echoes the wider adoption of technology in the international industry. From the middle of April, Chubb Corp has been processing almost all its facultative business through the eReinsure platform. According to eReinsure chairman Paul Henriod, Chubb - an investor in the system - is now putting 100% of its property and casualty facultative business through the platform, though surety and personal lines remains outside the system. "Reinsurers are responding very positively" to Chubb's decision, said Mr Henriod. "Chubb has been able to get the capacity and pricing it wants, and with one exception, all the reinsurers they sought for are on the platform."
The eReinsure platform enables automatic data migration from the underwriter's workstation to the eReinsure system. It then flows back into the Chubb system for accounting purposes, at the same time ensuring greater accuracy in the information. Increased efficiency and more accurate management information are also features of using the system, said Mr Henriod. "Chubb is able to analyse the facultative business at a level it's never been able to analyse it before."
A claims engine will be rolled out before the end of this year, and Mr Henriod foresees treaty business being put through systems such as eReinsure within five years.
Chubb's adoption of eReinsure may be an indicator that the long-awaited adoption of technology in the business is finally making inroads. With Axis, one of the new Bermuda-based reinsurers, now accepting all business through its internet site, the new wave of capital appears to be bringing with it much needed changes in business processes. For many years, the industry has been grappling, somewhat unsuccessfully, with the high costs of doing business.
In addition, problems such as the multiple rekeying of data at different stages in the business chain could be closer to eradication by adopting these processes. Much talk has circulated the industry for many years about the potential benefits of technology, but the use has been fairly limited up until now.
As more of the major players start adopting such systems, the rest of the industry will have little choice but to follow suit. The technology evolution is well and truly on its way.
Sarah Goddard is the editor of Global Reinsurance.