With expertise not just in North America but across the world, Bermuda Brokers has been matching managing general agents (MGAs) and other clients with reinsurance and insurance products for over a decade. In a recent chat at the Bermuda Risk Summit, our very own Neil Hitchcock, the Chief Reinsurance Officer at Bermuda Brokers, spoke with Insurance Insider. Neil shared his insights into the current dynamics and future prospects of the reinsurance and MGA marketplace.
Bermuda Brokers: the story so far
Now in its 12th year of operations, Bermuda Brokers was set up primarily to give US-based insurance brokers and MGAs access to insurance underwriting outside the US, both in Bermuda, and within Lloyd’s and London company markets.
New opportunities: hybrid fronting
The first key shift concerns risk-sharing. The market is seeing a growing number of issuing carriers in the US retaining a larger proportion of risk, rather than ceding everything to reinsurers. This move away from the traditional model is largely driven by reinsurers.
Known as hybrid fronting, the new risk-sharing model means that Bermuda Brokers can go to the reinsurance market in Bermuda or London with more credibility. It broadens the selection of reinsurers to choose from when looking for capacity for the market.
And Bermuda Brokers is expecting this trend to grow. There are an increasing number of options on the issuing carrier side, as well as more reinsurers looking to get into the program business.
This works well for Bermuda-based companies as there is a lot of capital to insure risk on the island. And by working through an MGA, foreign companies don’t have to worry about costly staffing.
Market conditions: individual risk
So, there’s an increasing appetite on the program side. On the individual risk side, Bermuda Brokers is seeing opportunities arising from the limited capacity in the US market for specialty classes.
The flood insurance gap in the USA, for example, is considerable, with insurers unwilling or unable to provide cover for major flood events. Bermuda Brokers is perfectly placed to help US companies find insurers and reinsurers in Bermuda or the London markets who will step up and take that on.
MGA fronting clients
Finally, there’s the MGA fronting space. Here, clients range quite significantly from traditional lines such as commercial auto in the US, to more niche specialty lines.
Measuring that value is a highly technical area. MGA clients are very specialist, so Bermuda Brokers will look at many deals per year – and place up to ten.
