Roger Gillett describes the marketing challenges for Bermuda over the next five years.
When Bermuda first developed a marketing plan for its insurance industry in 1990, it was easy. We knew who our competitors were. They were the “pesky” newer domiciles who were spending money to gain a high profile and overtake Bermuda's popularity and wannabe domiciles continue to try to emulate the Bermuda model.
But a lot has changed in the intervening years and in particular Bermuda's role in the world insurance scene has shifted. Consequently, in early 1998, the Bermuda insurance industry undertook an introspective review designed to identify the principle challenges to be faced in the coming five years. This review was anything but easy. Tough questions had to be asked of everyone involved in the industry. And one of the toughest was: Why do customers, new and old alike, continue to use us?
We recognised that one major task to be performed is the communication to the outside world of “what we are all about”. The simple things, like the capital base, the regulations and the capacity available are fairly easy because they are factual. More difficult to communicate (and by communicate, I mean gain the listener's acceptance) are the less tangible, more conceptual notions, such as our claims on intellectual capital, agility and innovation.
Fortunately, however, actions speak volumes. In Bermuda in the past 18 months, we have seen numerous examples of innovation in action, ranging from the development of a number of credit enhancement, weather related and integrated products, including enterprise risk, to companies created solely to “transform” insurance risk to securitised transactions.
We are aware that from a distance these developments appear complex and difficult to apply to other circumstances. Our job is to demystify some of these products to enable buyers to make informed decisions on their applicability.
To this end, we are in the process of developing a product inventory, which will describe products or solutions in straightforward terms and then list those companies able to provide them. We intend to publish this inventory both electronically and in the form of a printed brochure.
Keeping track of all the new products and new twists on old products is not easy. Given the speed of innovation and pace of change in this environment, the only thing we can guarantee with any certainty is that any comprehensive review will be out of date the instant it is published.
There is a “can do” atmosphere which we are trying to capture in our communication with the outside world. This translates into a real willingness to understand a client's business and a desire to solve problems. We recognise, and hope we portray, that Bermuda's insurance market was created from solving problems, including:
• developing a regulatory environment suitable for the formation of captives;
• providing a suitable venue for the creation of major insurers to provide liability capacity when capacity disappeared;
• attracting capital to fill the world's deficiency of property catastrophe capacity; or
• maintaining an environment where products related to credit enhancement and securitisation can flourish.
When Lee Coppack first coined the description “the world's insurance laboratory” to refer to the Bermuda insurance market, it struck a chord with me. This is certainly how we view ourselves and, increasingly, seems to be how the world perceives us. It is a strong platform on which to build our future endeavours and reputation.
And who is our competition now? It certainly is not just the other captive domiciles, because as the Bermuda market has expanded so, too, has the number of insurance centres. But even a cursory review shows that European and US companies have subsidiaries in Bermuda and, indeed, now Bermuda companies have subsidiaries in the US and Europe. There is clear recognition that certain businesses are best run in Bermuda and others, principally those requiring more labour intensive services, are best operated nearer the customer. Bermuda, therefore, has become an essential component in many insurance “networks” and as such has become viewed as complementary to, rather than competitive with, these other insurance centres.
Does this mean that in our marketing activities we should take our “foot off the pedal”? We do not think so!
Our aim, over time, is to have Bermuda companies play an important role in every major corporation's risk management programme and every insurance company's reinsurance programme and to maintain our position as the most popular choice of those companies forming captives.
We want people to continue to come to the Bermuda insurance market not only because of the strength of its financial and intellectual capital, its rate and form freedom and one-stop shopping advantages. We want business people to come to Bermuda because, in simple terms, this is where “deals get done” and we know that this can only be achieved, from this little island in the Atlantic, by constant and consistent communication of our products and philosophies. But we do not underestimate the challenge this presents.
Roger Gillett is chairman of the Bermuda Insurance Marketing Committee and senior vice president business development, ACE.