Bermuda could see consolidation due to the credit market crunch, predicts Peter Middleton

“It will be interesting to see what affect that will have on Bermuda and whether there will be any consolidation,” said Peter Middleton, managing director, specialty division at Markel International.

He was talking about the US subprime crisis and its impact on the credit markets. “It might generally help to harden things up but at the moment it’s difficult to tell.”

He anticipated there would be some impact on professional liability lines such as directors' & officers' and errors & omissions insurance. “It’s normal in the US that if investments are affected somebody ends up being sued.”

“It's important that the regulators understand what insurance is all about

Peter Middleton, Markel International

Picking up on the differential pricing debate – kick-started by Munich Re at its press conference on Sunday at the Rendez-Vous de Septembre – he said 320 years of a successful subscription market would be difficult to replace.

Some industry experts anticipate that the European Commissioner for Competition, Neelie Kroes, may conclude subscription pricing – ie all reinsurers offering the same pricing – is anti-competitive. If this is the case, differential pricing may be the only solution.

“If necessary you’d write your own layers or your own share at differential pricing,” said Middleton. “But we don’t want to go down that road. It’s important that the regulators understand what insurance is all about.”

“It might generally help to harden things up but at the moment it's difficult to tell

Peter Middleton, Markel International

Middleton also argued that having the same pricing makes sense. “There’s still a bit of an art in underwriting – it’s not just a science – but because we all use the same models its logical that we all come out with similar pricing.”