Bermuda represents about 35 per cent of the global reinsurance capacity, a local reinsurance executive revealed at the Bermuda Risk Summit.

“That is an amazing amount for such a small island,” said Jeffrey Manson, senior vice-president, underwriting and head of global public sector partnerships at Renaissance Re.

Mr Manson told an audience at the Hamilton Princess & Beach Club that it was impressive to see the impact that Bermuda had on the global stage.

“The Bermuda market has paid around $500 billion in property and catastrophe casualty speciality losses in the US alone, helping communities rebuild after tragic events,” he said.

Reflecting on the global natural disaster outlook for last year, he said 2024 was another very active period for severe, convective storms in the United States and Canada, with hurricane activity, severe flooding and earthquakes hitting different parts of the world.

“Aon’s recent catastrophe report from 2024 revealed there were over $368 billion of economic loss, with 60 per cent of those losses uninsured. That made 2024 the ninth consecutive year where global economic loss exceeded $300 billion. It was also the sixth costliest year on record for insurers at $145 billion.”

Mr Manson said we do not yet know where 2025 would go, but it was not off to a good start.

He said the growing ferocity of so called secondary perils, such as hail, flood, storm or bushfire, continued to be a problem.

Looking at the past 20 years, he said there were only three years when peak perils surpassed so called “secondary perils” in the aggregate: 2004, 2005 and 2017.

“Secondary peril losses since 2000 have reached an estimated $1.4 trillion, while primary perils – tropical cyclones, earthquakes, and wind storms, roughly attributed to about a trillion dollars,” he said.

He called for more risk mitigation strategies before an event and resilience prioritisation to reduce damage from smaller disasters.

Panellist Christian Dunleavy, group president and chief executive officer of Aspen, classified secondary perils as earnings events for companies and major perils as events that eroded insurance firms’ capital.

“Those major events are the ones that usually result in significant shifts in pricing cycles, which ultimately flows through to the consumer,” Mr Dunleavy said. “That really is driven by what is ultimately a supply and demand business here.”

He saw a significant appetite for catastrophe risk, partly because it is uncorrelated with the financial markets.

On the topic of pricing, he said: “We can continue to mitigate the cost of insurance by accessing the lowest cost of capital that we can find out there. The industry has done a lot in the last couple decades to really try to embrace that.”

From a major event point of view, he thought the insurance industry had performed “pretty well” in rebuilding balance sheets and having a lot of capital strength.

“Where the industry has not done so well is covering its own cost of capital because of minor perils,” he said.

He said this issue changed the catastrophe market in 2023 as much as the size of the individual events themselves.

“There was a prolonged period where the cost of capital was not being serviced, so returns for the industry just were not there,” he said.

The fact that insurance is a difficult cost for many consumers did not escape Mr Dunleavy.

“We are working hard to really try to bring capital to the table, provide solutions along the way, in a way that makes it affordable,” he said. “However, that is easier said than done. We need long-term thinking to really get things done.”