Skip to main content

John Johnston, CEO Deloitte Caribbean and Bermuda region shares his insights on the Bermuda economy

Editorial from the Bermuda Business Review, 2019-2020

"International business, traditionally in the insurance, reinsurance and asset management industries, has for some time been the main pillar of Bermuda’s economy, with tourism representing another pillar that is not just significant in its own right but also one which is highly complementary to international business."

Bermuda’s climate, strategic location and ease of access from major US, Canadian and European cities, make tourism and international business a near perfect match.

In the global insurance and reinsurance business, Bermuda has enjoyed a decades-old reputation as being the premier jurisdictions for risk management solutions; with a sophisticated infrastructure of underwriting, broking, actuarial, accounting, legal and banking talent, the Island continues to punch above its weight.

European and North American regulators have recognised the quality of the Bermuda market with Solvency II equivalence and NAIC-qualified jurisdiction status, respectively. The validation of these internationally respected regulators is a testament to the fact that high-quality, offshore jurisdictions like Bermuda have a legitimate and important role in the global economy.

After a prolonged period of soft pricing in the insurance business and a resulting wave of consolidation in the market, Bermuda underwriters are reporting signs of improvement in prices. The consolidation of the past decade has resulted in fewer participants but, far from diminishing Bermuda’s position, these companies are larger and stronger and can truly compete on a global scale. Some of the largest and most respected global insurance and reinsurance companies have made significant acquisitions in Bermuda in the past two years, securing for themselves strategically important platforms for growth and innovation.

Bermuda’s reputation as a place to quickly and profitably bring risk management innovation to life is perhaps best reflected in the growth of the alternative risk capital business in recent years: the Bermuda market has the largest Insurance Linked Securities (ILS) sector, with some 200 instruments issued in the past five years bringing combined risk capital of $40 billion to global markets and providing for a unique and attractive opportunity to investors.

Read John's editorial and other related business articles in the full issue of the Bermuda Business Review 2019-2020

Another area of remarkable growth has been in life reinsurance. In the past five years, over 50 newly licensed long-term insurers have been established in Bermuda, bringing the total number of licensed long-term entities to over 150 as at 2018. Capital and reserves in this business approximated $370 billion as at 2018 and new entrants and investors continue to show an interest in the market.

Bermuda has also been a jurisdiction of choice for the investment business over the years, with various structures including investment funds, ILS funds, PE funds, hedge funds and ancillary businesses attracted to Bermuda by the ease of doing business, a well thought-out set of regulations and, of course, Bermuda’s quality reputation. Flexibility of legal form, such as limited liability company rules that blend elements of partnerships with corporations, segregated portfolio company rules – and others – mean that a wide variety of structures can be accommodated in Bermuda.

Bermuda’s dependency on its traditional economic pillars has not been without risks and challenges. Industry consolidation, immigration restrictions, the push towards outsourcing and ‘offshoring’ to low-cost centres, plus competition from rival jurisdictions have all resulted in lower employment numbers in international business. With an ageing population, a shrinking tax base, a significant public debt to manage and mounting geo-political pressure on offshore jurisdictions, Bermuda now, more than ever, needs solid business growth that will attract new residents, a thoughtful immigration strategy to increase population or, ideally, some combination of the two.

One of the underpinnings of Bermuda’s international business success, has been the country’s regulatory system. The Bermuda Monetary Authority (BMA) has evolved, hand-in-hand, with industry, to become an internationally respected body – the recognition by EU and US regulators is the clearest endorsement. The BMA has achieved something unique in theregulatory world, which is to balance its oversight mandate with an ability to support business growth.


Recognising the disruptive force of technology in financial services (fintech), this is one avenue of growth the Island is currently pursuing. Bermuda has been actively building a legislative and regulatory environment that will make the Island an attractive jurisdiction for fintech innovators. The BMA’s Insurance Regulatory Sandbox and Innovation Hub are two examples: the Sandbox creates an insuretech ‘regulatory sandbox’ for the purpose of facilitating companies that would like to innovatively apply technology in the insurance sector in a controlled environment; the Innovation Hub complements the Sandbox, acting as a platform for exchanging ideas to promote insuretech innovation.

Other developments designed to promote fintech initiatives include the Digital Asset Business Act, 2018 (DABA), which covers the licensing of entities engaged in digital asset businesses and initial coin offering legislation designed to enable coin and token offerings from Bermuda.



Dealing with risk and uncertainty in global markets and geopolitics are nothing new to Bermuda or, indeed, other offshore jurisdictions. Bermuda’s ability to respond intelligently and efficiently to change and opportunities, maintain an attractive and open working environment, whilst addressing its current fiscal situation, will be major determinants of its success. Bermuda must, through all this, preserve its hard won reputation for quality: in the long-run this, more than any other factor, will be what continues to separate Bermuda from its competitors.

Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey