Bermuda’s importance as an insurance and reinsurance centre has come to the fore at a time when insured losses from global catastrophes in the first half of the year have totalled $55 billion.That is the view of Robert Hartwig, president of the New York-based Insurance Information Institute (III), who has been telling some Americans impacted by natural disasters of Bermuda’s role in aiding their recovery.Dr Hartwig, on the Island yesterday to attend a dinner event for brokers hosted by insurer Canopius, said he had recently visited Tuscaloosa and Birmingham in Alabama, an area which suffered around $2 billion of tornado damage this spring.“I sat down with the editorial boards of both newspapers in the area to talk to them about how the insurance process works,” Dr Hartwig said in an interview. “I told them that a lot of money to rebuild their homes would come from places like Bermuda, Switzerland and Germany. They were quite surprised to hear it.“The larger scale the losses, the more important places like Bermuda are in the recovery. Even though some companies have redomesticated to Switzerland or Ireland, Bermuda still continues to be an important insurance hub and I expect it to continue to be.”Dr Hartwig appeared yesterday in a webinar on global catastrophes put together by Munich Re and the III. The film highlighted that economic losses of $260 billion so far this year have made 2011 the costliest year on record, even with the second half of the year still to come. The biggest event was the earthquake and tsunami in Japan, which cost $210 billion.The previous costliest year was 2005, the year of Hurricane Katrina, which saw economic losses of $220 billion.Half-year insured losses of $55 billion were four times the first-half ten-year average. And the $17.3 billion in insured losses in the US was well over double the ten-year average.Dr Hartwig said that while property and catastrophe re/insurance rates were increasing in the Asia Pacific area and, to a lesser extent, in some catastrophe-prone areas of the US, the conditions still do not exist for a broader property and casualty market turn that many Bermuda companies are waiting for.In the view of Dr Hartwig, who is an economist with 18 years’ of insurance experience, four criteria need to be met for the market turn to happen.“The first is a sustained period of large underwriting losses,” he said. “We have had large losses, but not sustained.”“Secondly, there needs to be a significant, material reduction in the industry’s claims-paying capital, or surplus. At the end of the first quarter, the US property and casualty insurance industry had a record level of surplus and there remains significant excess capital of between $75 billion and $100 billion. There also needs to be a demonstration that there is more underwriting discipline in the marketplace; that insurers are holding the line on pricing. But net pricing is actually still trending down.“Fourthly, there needs to be a hard reinsurance market, a reduction in reinsurance capacity. We are part way there, but there is not yet a real shortage of capacity.“We don’t have all the criteria in place for a broad market turn and we’re probably looking into 2013 before that happens.”Though hurricanes were often talked about as being potentially “market-turning”, it was unlikely that a major storm event in the US this year would affect most casualty lines, such as medical malpractice, he added.The Bermuda market has come under threat from proposed changes to tax rules in the US, as outlined in the Neal bill and the proposal for taxation on non-US affiliated reinsurers spelled out by President Barack Obama’s national budget plan earlier this year.In US politics, it was commonplace for industries and locations to be singled out for criticism in political rhetoric, Dr Hartwig said. He gave an example of the aerospace industry, threatened by the President’s remark that one of the reasons Democrats and Republicans could not reach agreement in ongoing negotiations on increasing the US debt ceiling was that Republicans were insisting on tax concessions for corporate jets. This remark was threatening to an industry that employed one million people in the US, Dr Hartwig added.“Bermuda has not been singled out,” he said. “But it may become part of a much larger effort to raise taxes from every nook and cranny. If you’re going to have an overhaul of the tax code, that’s one thing, but you don’t achieve that by singling out industries that bring real benefit to Americans,” he added.While insurers are operating in a tough market right now, Dr Hartwig sees real opportunities ahead for the industry with the growth of population and global wealth.“Looking into the future, each increment of growth you realise is going to require you to assume a greater increment of risk,” Dr Hartwig said. “The greatest growth opportunities exist, not in the US or Western Europe, but in the emerging markets, where economic growth and growth in insurance premiums will be higher. However, these are riskier places to do businesses, in terms of catastrophes and political risk.“For example, many insurers believe the Middle East offers a great opportunity, but the Arab Spring highlights that it’s a riskier place to do business.”Demographics suggested that industries including agriculture, energy and health would necessarily increase risk exposures as they expanded to meet the needs of a larger and wealthier global population, he said.Useful website: www.iii.org