Bermuda has been given a boost by the arrival of new players in the insurance and reinsurance sector in Bermuda, even amid the turmoil of the Covid-19 pandemic.

Mark Allitt, managing director and insurance sector lead at KPMG in Bermuda, said: “2020 was pivotal year for creating an environment for the 'Class of 2020-2021'. It was a busy year, and it created an opportunity for many of those players to launch.”

After a number of years of soft market conditions, there has been a hardening of rates. Mr Allitt said: “The market cycle has been reinvigorated, and Covid has been a contributory factor to that happening.”

Other factors have been changes in risk appetite and increased frequency of natural catastrophes, with last year the fifth costliest for natural catastrophes.

“There was also a lot of adverse development around previous year cat losses. That, together with the Covid impact, has created the environment where rate-hardening had to happen,” Mr Allitt said.

About $19 billion of new capital came into the market, with some $11 billion going to the more traditional players and the rest going into the insurance-linked securities market.

New Class 4 names include Conduit Re, Vantage Risk, and Chaucer, while there have been licence upgrades to Class 4 by Ark and Canopius Re.

Convex Re, a Class 4 that formed in 2019, was an important development, according to Mr Allitt. He said: “It validated Bermuda's position. Of the $11 billion that was deployed into the [traditional] market, about a third went into new starts.

“The volume of that capital that has orientated itself around Bermuda is really impressive, and Convex to a certain extent helped validate the Bermuda model.”

Mr Allitt added: “There’s a really positive story around the Bermuda players. We've also seen a number of MGA start-ups, such as Mosaic. Bermuda is a significant part of the platform, which demonstrates the relevance of the traditional market.”

Looking ahead, Mr Allitt said Bermuda is in a “naturally strong position”, but must keep its infrastructure strong and continue to innovate to safeguard its leading global position in the insurance and reinsurance industry.

Regarding innovation, he said: “The Bermuda Monetary Authority has done a great job in responding to market demand, producing new licence classes that cater for more innovative business models.

“We've seen that with the sandbox environment. There is a real drive by the BMA to innovation, and that's being done in partnership with the industry.

“It’s a real testament to the sandbox that we've had a marketplace graduate from it. There are several entities in the sandbox, and there are a number of entities looking at the sandbox to test new ideas."

He noted that there has been a lot of innovation in the class 3A and 3B licence classes, as well as in the life space.

Mr Allitt added: “It is important that Bermuda maintains its re/insurance infrastructure with continued investment by the industry of on island talent. Bermuda is a market place. It needs to have strong professionals, ideally on island. It's important that the industry focuses on that and it brings with it economic benefit of the country.”