THE AMERICAN CONSULATE GENERAL   FINAL 
                                                                                                                  

“Improving the Image of the Bermuda Re/Insurance Industry in the United States and Beyond”
Comments of US Consul General Gregory W. Slayton
at the Insurance Day Summit June 10, 2008 

Thank you very much for that gracious introduction. It is a real pleasure and a true honor to be here – given the critical importance of the Bermuda re/insurance industry to the USA…and vice versa.

Today, we’ll talk about the following:
1.    Who are the key stakeholders/target markets for the Bermuda’s                          re/insurance industry in the US?
2.    How is the Bermuda I/R industry doing with these key stakeholders?
3.    How can the Bermuda I/R industry’s image be improved?

After my formal remarks, I do hope that there will be some questions (demonstrating that at least someone was listening!!). For a written outline of this talk as well as information on the work of the US Consulate in Bermuda, please visit:  http://hamilton/usconsulate.gov

1.    Who are the Key Stakeholders/Target Markets for the Bermuda Re/Insurance Industry in the US?

·       U.S. federal and state government leaders and regulators.
·       Clients, corporate partners, shareholders, etc.
·       Economic opinion leaders (i.e. Davos) and shapers (i.e. The Economist) and the economically literate general public.
·       The general public at large.

2.    How is the Bermuda I/R Industry Doing with its Key Stakeholders?

·       U.S. Federal and State government leaders and regulators
o   Better at federal level over past three years – still work to do (ABIR, Corp Lobbyists, GoB and USG efforts).
o   Lots of work to do on further strengthening US/Bermuda regulatory coordination.
o   Examples of US/Bermuda regulatory joint efforts
o   State level – untouched except by reinsurers themselves – and then only very lightly. State insurance regulators are very familiar with the role of Bermuda companies in serving US surplus lines and reinsurance markets;  several state regulators (Louisiana and South Carolina) have written in support of ABIR position in defending against adverse treatment in US tax law)

·       Clients, corporate partners, shareholders, etc.
o   Excellent returns over time for shareholders.
o   Client satisfaction is reported to be generally high.
o   Some domestic insurers and re/insurers have serious issues
o   Tax treatment, etc. A handful of large US insurers are trying to change the tax law with regard to the use of affiliated transactions by non-US insurers; 
o   Yet cooperation and interaction between Bermuda R/I and US & UK counterparts grows monthly.

·       Economic opinion leaders and the economically literate public
o   Difficult to assess without specific polling data, but perhaps described as ‘grudging respect” for industry’s key role in world economy and generally strong shareholder returns.
o   Capital markets appreciate that Bermuda is the place where capital markets and risk management converge; they know the talent is here to create new products and to put investors’ capital to work;
o   Tremendous opportunity for improvement here given R/I industry’s vital importance to world economy, generally outstanding record of shareholder returns and strong history of meeting its commitments to clients

·       General Public
o   Most in the general public would ask: “What is a Reinsurer?”
o   Virtually no one in the general public knows that Bermuda is one of the reinsurance capitals of the world
o   Many think that the general re/insurance industry is only one cut above used car dealers.

3.    How Can the Bermuda I/R Industry’s Image Be Improved?

·       With federal and state political/regulatory leaders:
o   Bermuda insurers must recognize they are in a regulated industry where their ability to do business can be taken away from them; regulators and policymakers can prevent market access and can replace private markets with government programs.  The insurers need to structure themselves to have a public affairs and government relations perspective. As the companies get bigger, the lean corporate structures will have to allow growth for public affairs functions.
o   “Hiding” doesn’t work, we are too big to duck and cover
o   Continued strengthening of bilateral relations (annual “State Visit” to DC, stronger and better coordinated lobbying presence, establishing a Bermuda House in Washington, DC?).
o   Stronger cross-industry lobbying efforts (ABIR)
o   BMA strengthened (ongoing – VIP Board members needed)
o   Coordinated lobbying/PR efforts by largest I/R firms
o   More coordinated lobbying efforts with European insurers as has been done on the tax issue; future federal insurance regulation debate affords us another opportunity to engage in this fashion
o   Continue to work with the environmental groups on our coalition in the US on catastrophe insurance/reinsurance issues
o   Push GoB for continued improvements in insurance regulatory regime and worldwide recognition thereof.
§  BMA Euro Solvency II compliance program has now been launched; goal is to meet or exceed international solvency regulation standards for the class 4 carriers here

·       With State Regulators: How about inviting all 50 State insurance regulators to a Bermuda-based conference on “Effective Insurance Regulation in the 21^st Century” so they can begin to see first hand and understand what Bermuda has become?

·       With Clients, Business Partners and Shareholders: 
o   Keep doing what you’re doing – be sure to self-police against rogue companies who don’t pay claims (another reason for strong BMA regulation).

·       With economic opinion leaders and the economically literate public:
o   How about a targeted, industry-wide, multi-year campaign to help key opinion leaders (Davos) and opinion shapers (The Economist) better understand and appreciate the R/I industry?
                    *think high tech industry and Silicon Valley

·       With the general public. This is a huge challenge that has developed over decades.  Industry-wide effort need to begin with opinion leaders and shapers (per above) that will percolate down over time and permit a wider PR effort to the general public to be successful.

·       In Bermuda, the old establishment needs to recognize that both political parties support and promote international business,  business leaders have to work with the party in power; 

4.    General Caveats

·       This is a long-term strategy that will take several years (3-5) to bear serious fruit even among opinion leaders and shapers.
·       Educating the general public about the Bermuda I/R industry could take a decade or more.
·       Any major default by a Bermudian R/I firm would set these efforts back hugely (possibly even a fatal blow given the “blank slate” that exists in most people’s minds today).
·       The most effective R/I industry repositioning effort with opinion leaders and opinion shapers would be an industry wide one (beyond just Bermuda re/insurers).