We had the pleasure of attending ABIR’s recent 25th anniversary celebration seminar, and of hearing from many of the pioneers and current leaders of the Bermudian (re)insurance community on a range of relevant topics.
In listening to and thinking about what we heard, we believe there are a number of key points that were made and should form the basis of any thoughtful and well-informed analysis of how to maintain Bermuda’s pre-eminent status. None is unexpected, but they are often forgotten, overlooked or downplayed.
Firstly, to thrive, any business needs to attract and retain the most talented people, because in a world in which the value of whole industries is based upon intangible rather than tangible assets (such as intellectual property), the differentiator between businesses which are able to adapt and those which wither and disappear will be the intellectual capacity which they can deploy. As one speaker said: capital does not attract talent; rather talent attracts capital and then more talent. The development of the Bermuda (re)insurance industry is a classic example of that truism, with the pioneers of the industry able build businesses around themselves and the teams they recruited, matching and melding both local and global talent.
Secondly, the idea that focusing on the recruitment of one particular “type” of individual can sustain a business over the long term is misguided and increasingly untenable. The more diverse a talent pool is, the greater the likelihood (provided it is effectively managed) that it will be able to create new intellectual capital and be open to new ideas. “Groupthink” by a collection of individuals who all fit the same basic profile is one reason why both risks and opportunities are missed, with unfortunate consequences. Apart from questions of fairness and equity, recruiting from a narrow base is simple wasteful of human potential.
Thirdly, one can have talent and capital in abundance, but still be shunned; not because of one’s own reputation, but because of the environment in which one is perceived to operate. Several ABIR speakers made the point that the reputation of the Bermuda market has been hard won through a conscious effort by the industry, government and regulators to hold themselves publicly to the highest standards, after the debacle suffered in the 1980s. As Warren Buffett said: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Fourthly, relationships matter. We are supposed to live in a world in which more and more interactions can be and are “de-materialized”; and, clearly, the (re)insurance business as now constituted could not function without the efficiencies and economies of scale afforded by modern technologies and telecommunications. Nevertheless, the (re)insurance business remains one in which direct personal relationships between a relatively small cohort of individuals are fundamental to the completion of large, complex transactions, because the parties involved know, trust and respect each other. In the case of Bermuda, its small size enhances the ability to create and maintain such essential relationships, with the proviso that the talent pool has to be high quality, diverse and constantly replenished.
And we could not close this post, without mentioning another factor that makes Bermuda such an effective forum for global (re)insurance business: the quality and openness of its regulatory framework; and that the fact that one can have a direct relationship with the BMA team and obtain quick and responsive decisions and guidance. This is a key competitive advantage for any regulated business.
The Awbury Team