The Bermuda reinsurance industry is playing a critical role in addressing some of the world’s most significant challenges.

This, from Arthur Wightman, PwC Bermuda, Territory and Insurance leader in reflecting on last week’s PwC Insurance Summit.

He commented on how reinsurers are faced with another layer of complexity in assessing and pricing risks, because of their increasing need to factor in global dynamics.

The conference, presented with the Financial Times, heard how geopolitical risk is an increasing concern for reinsurers.

The hard market and Bermuda’s critical role in the global insurance industry were other key topics at what Mr Wightman called Bermuda’s flagship reinsurance industry event.

He said: “For the first time in a very long time reinsurers are having to deal with geopolitical risks – and that adds a whole layer of extra complexity that we haven’t seen before, and needs to be factored into the strategic decision-making of companies.

“Right from the boards and all the way through the organisation, there needs to be an additional layer of focus on these emerging risks, and particularly the dynamics in different parts of the world and how they’re emerging.”

He also said: “The Bermuda market plays an outsized hand in responding to geopolitical and other growing global risks including cyber, and climate. Responding to catastrophic events has always been part of the DNA of Bermuda.”

He said Bermuda makes up around 36 per cent of the global reinsurance market, and is the largest supplier of catastrophe reinsurance to US insurers.

PwC said reducing the cyclical nature of the reinsurance market was another focus of discussions at the summit.

Responding to the recency of rising inflation, substantial natural catastrophe and war-related claims, reinsurers have laid down significant price increases, after failing to earn their cost of capital in the last five out of six years.

Speaking at the summit, attended by nearly 300 industry professionals from over 50 different reinsurers and other organisations, Jim Bichard, PwC’s global insurance leader, weighed in on the question of how long the hard market was going to last.

“There is no doubt about it that we are in a very hard market at the moment,” he said. “There is a pretty good consensus that this coming renewals season is going to be very strong – and many factors impact that.”

He added: “I have had quite a few people say to me this isn’t a hard market for reinsurance. This is just the new normal.”

Mr Bichard moderated a session on how long reinsurers will lead the market, with panellists Christian Dunleavy, group chief underwriting officer, Aspen, Scott Egan, CEO of SiriusPoint, and, Nephila Holdings president Laura Taylor.

Matt Britten, PwC Bermuda insurance partner, said: “We heard about the need for the industry to be more ambitious in meeting demand for coverage, and not to walk away from risk, nor to consider certain risks as uninsurable, but instead to address the change in the probability of risk, drive clarity on coverage, and better define who are the best owners of risk throughout the risk chain.

“We also heard a lot about the rapid evolution of the risk environment, and, how sustainability, economic, geopolitical and social risks are all becoming more correlated.

“In closing the protection gap around these risks, the industry needs to also help close the knowledge gap around both risk and the critical role that insurance plays.”