Dane Douetil, chief executive of Brit and chairman of an industry taskforce in London which advocates lower taxes for insurers, has stated that he knows of a number of reinsurers (other than Omega and Hiscox) who are considering relocating to Bermuda. Most market commentators agree that other London players are likely to relocate to Bermuda over the coming 12 months. No doubt London's loss will be Bermuda's gain. However, Bermuda's growing popularity does present challenges for new start-ups on the island, including attracting and retaining the right people on the island and securing basic infrastructure such as premises and IT.

Indeed, sustainable development is now the hot topic of debate in Bermuda's parliament and it receives more attention with each announcement of a new start-up or established reinsurance company relocating to Bermuda. It is easy to see why sustainable development is a concern to the island's residents given the visible symptoms of a booming economy which is being driven by the growth of the island's reinsurance industry.

Such symptoms are particularly apparent at rush hour when an endless snake of slow moving cars and scooters begins at St Georges (in the east) and Somerset (in the west) and grinds its way slowly into Hamilton each week-day. Over the past three years the island has seen a noticeable increase in the level of traffic, despite the fact that each household is limited by law to a single car. A number of interesting solutions have been proposed, including housing the island's entire expatriate workforce in a “compound” close to Hamilton and then bussing the guest workers into town each morning for their day's work. A novel idea, although there may be one or two human rights issues to resolve before such a plan could be successfully implemented.

This Viewpoint item appeared in issue 110 of JTW News - November 2006

Author: Mike Morrison - KPMG