Bermuda's core reinsurance business faces challenges but politicians, regulators and companies are aligned in devising solutions
We all know money and power are what make the world go round.
Which is why it is strange that only a very few large countries choose to house both of these key centres of power in the same geographical location.
In the US, New York brings the markets and the money, but Washington has the power.
In Europe, mighty Germany is fragmented and federalised both in its markets and its politics. Do you go to Frankfurt, Hamburg, Hannover, Berlin or Munich? The destination depends on the question you want answering.
Meanwhile, Italy and Spain are bi-polar with well-matched heavyweights Milan and Rome and Madrid and Barcelona slugging it out for dominance.
The only European exceptions are London and Paris. Both are the undisputed capitals of their respective nations. The money, the markets and the seat of government are all in the same place.
This confers a major advantage. You can raise cash in the morning, lobby a political power broker over lunch and dine with a diplomat.
But even with the geographical proximity sorted, it is hard to get things done.
The nature of large economies is that they house many powerful but competing interests. To put it bluntly, insurance is not always going to be top of the priority list.
But in a smaller territory, the parliament and the money have to be in the same place, almost by default.
At the same time, there can’t be as many competing interests. A small place tends to specialise because it cannot be competitive as a generalist.
And so to Bermuda.
With so few consumers, it cannot house a major home market and it cannot hold many workers.
It has to go up the value chain.
It has successfully pitched to the highest added value end of the global insurance market. Here the challenges of its geographical isolation and high relative costs aren’t barriers.
Here is one of the only places on earth where the senior management of an industry, the government and regulators rub shoulders on a daily basis.
And the crucial difference is that here they are aligned. They listen to one another and try and give the other what it needs to succeed.
As the Association of Bermuda Insurers and Reinsurers celebrates its 25th anniversary, its core reinsurance businesses are challenged.
But here is also where the solutions to such challenges are being invented: ILS, capital lite, beta and portfolio underwriting, hedge fund re, cyber and even the high regulatory end of InsurTech are all boiling away in this veritable insurance crucible.
Bermuda deserves to succeed because it is one of the only territories fully invested in doing so.
Every time I return here, I am refreshed.
I am confident that 25 more years of successful development are highly likely.