It seems like only yesterday that Bermuda’s burgeoning reputation was exciting commentators keen on creating a rivalry between the island and London.
In quick succession, Hiscox, Omega and Kiln all redomiciled to the Caribbean, with others setting up operations in a bid to take advantage of the developing market.
Now, as the tax-friendly island faces political unrest and allegations of corruption involving government officials, questions have been raised as to whether its market is losing its shine?
Certain insurance figures have dismissed suggestions that the cause of unrest – a leaked police file concerning an investigation into corruption at the Bermuda Housing Corporation (BHC) – will have any real affect on the market.
Both leading political parties are said to be supportive of international business and, with a stuttering tourist trade, attempts to destabilise the government are unlikely to bleed into the market.
Others take a more cautious approach and as legal wranglings continue over whether the media should be gagged from publishing further details about the leaked memo, there are niggling worries that non-native insurers will begin to question what, if any, effect the unraveling corruption scandal may have on their bottom line.
“International businesses don’t have the permanent anchors like Bermudan reinsurers; their money is invested elsewhere,” one Bermudan reinsurer said this week. “They may represent less than one quarter of the market, but if it starts to distract business then they will go.
“However, as long as the status quo remains as it is the international business will be fine here and there is no obvious move to discourage them.”
Any impact on reinsurers from the BHC scandal is regarded as a separate issue to that driving the recent increase in Bermudan arrivals at Lloyd’s.
Says one senior source: “The reason we come to Lloyd’s is because of the gearing and the derivative rating.
Lloyd’s has access to markets around the world and it is the home of non-traditional insurance.”
With Bermuda being such a small place, the timing of the Bermudans’ arrival at Lloyd’s, coupled with the corruption scandal and political disquiet, is certainly inconvenient.
As a Bermudan insurer puts it, it “looks bad” for the island and may give Lloyd’s a slight psychological edge. But does it take off the shine? Until the much-anticipated elections have taken place this summer, only time will tell.