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Risky Business Means Security
By Roger Crombie
Bermuda may be small, but it is one of the three most important reinsurance centres in the world. In the industry, Bermuda is referred to as the "world's risk capital."
Insurance companies buy reinsurance, the bedrock on which international trade is built. Reinsurance takes the ultimate risk associated with business operations. Bermuda reinsurers buy risks from companies in 200 countries, with the largest percentage coming from the United States. The homes or businesses of most American residents are reinsured by one or more Bermuda companies.
The islands are home to more than 35 reinsurance companies with at least a billion dollars in capital. Hundreds more Bermuda companies provide reinsurance to specific customers through programmes of self-insurance, also known as "captive insurance."
Reinsurance is Bermuda's largest source of revenue, providing more than 1,700 jobs on the islands and 10 times as many around the world, since the Bermuda companies maintain offices in more than 100 countries.
When you eat in any of the islands' restaurants, you find yourself surrounded by reinsurance people. One reason for Bermuda's success in the industry has been the "clustering effect." Just as Silicon Valley brings together the best software minds, so Hamilton has a concentration of reinsurers that allows ideas to flow and new thinking to emerge.
Since the mid-1980s, when reinsurance companies first appeared in Hamilton, more than $120 billion of capital has been accumulated on the islands, most of it in waves that followed terrible catastrophes. Hurricane Andrew in 1992, the attacks of September 11, 2001, and Hurricane Katrina left the world desperately short of reinsurance capacity. In each case, investors responded by starting new companies in Bermuda to provide coverage and let commerce flow.
Bermuda's reinsurance people come from all over the world, with Americans, Brits and Bermudians best represented. As a result, people talk about Bermuda's intellectual capital as much as they do about its financial capital.
Relax, enjoy, save and see Bermuda by bus. A blue or pink pole indicates bus stops. If the pole is topped with blue, the bus travels from Hamilton; if the pole is topped pink, the route is toward Hamilton.
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