This was the USP, but many other climate issues were explored that will chime with the concerns of London market executives.
These included a commonly held view that nat cat models need to be "more robust", an increased prospect of more major Atlantic hurricanes, the technical challenges of measuring insureds' emissions, and how product innovation needs to play out in practice.
Hurricane risks, modelling requirements
In one session that examined Atlantic hurricane frequency and severity, it was acknowledged that there is still no consensus on the impact of climate change on the frequency of these nat cat events.
Delegates heard however that the insurance industry should generally be prepared for a higher proportion of future hurricanes to be at major hurricane strength and to feature more storm surge and precipitation, despite initial forecasts for 2023 to have a lower than 30-year average season of hurricanes.
Dr Peter Sousounis, VP and director of climate change research at Verisk, said that while it’s unknown whether the impact of climate change is directly driving a higher frequency, there is more of a consensus that there will be more Category 3 and Category 4 hurricanes.
While it was acknowledged that landfall incidents have increased in frequency in recent years, it was also noted that modelling firms can't be 100% convinced this has directly been caused by climate change.
Nevertheless, Craig Tillman, president at RenaissanceRe Risk Sciences, pointed to a report showing how trends around Atlantic storms will exacerbate, with precipitation projected to incline by 14%, storm surge levels expected to increase as sea temperatures rise, and the maximum intensity of storms anticipated to rise by 5%.
Liz Henderson, co-head of catastrophe analytics and executive managing director at Aon Reinsurance Solutions, pointed to another risk factor in the US, where around 40% of the population live in coastal areas, even though these regions represent less than "10% of the entire land area of the US".
A significant criticism of the industry to date has been that we are not pushing our modelling tools to provide a more forward-looking view of the risk
Henderson also stressed the need for models to be more robust and forward-looking.
"A significant criticism of the industry to date has been that we are not pushing our modelling tools to provide a more forward-looking view of the risk," she said, adding that users "really need to trust our models.
"It is becoming more evident that we have to be more detailed and robust to bring more capital in and support reinsurers' needs," she said.
Henderson made the point that the industry's expertise on modelling needs to be brought to organisations outside of insurance that would benefit from it. This observation was picked up in another session, where Caroline McGill, principal for sustainability and impact investment strategy at Hillbreak, the property consultancy, mentioned that real estate asset managers are looking to bring modelling expertise in-house, with an M&A transaction in this space under consideration.
We have started the process for ensuring that Bermuda is a place for climate innovation
Innovation needs
As a centre hosting a nexus of underwriting experience, capital, conservation projects and growing scientific expertise, a robust case was made for Bermuda to become a world-leading hub of innovation that encompasses insurance products, carbon-reduction projects and nature-based solutions, with the latter referring particularly to utilising the oceans surrounding the Island.
Explaining the government's own climate aims, deputy premier of Bermuda and minister of home affairs Walter Roban said the goal is to ensure that 85% of the Island's energy consumption will be generated by renewables.
Roban told delegates: "We have started the process for ensuring that Bermuda is a place for climate innovation. We are corralling the knowledge and we can be at the centre of climate risk management opportunities. No other jurisdiction can do what we can do."
The deputy premier explained that sandbox testing provided by the Bermuda Monetary Authority will play an important role in this wider strategy.
This warmer, faster route to entry in Bermuda may highlight why UK regulatory reforms, lobbied for by the London Market Group and due to be enacted next week, need to be implemented rapidly.
Innovation was discussed in a global context too, with California's insurance commissioner Ricardo Lara revealing there are five parametric product pilots underway in the state, focussing on perils such as wildfire, extreme heat, coastal flooding and inland flooding.
Incidentally, on the topic of US carriers such as Allstate and State Farm pausing the underwriting of homeowners and commercial cover in the state, Lara said this situation highlights the need for insurers to have an "open and honest" dialogue with regulators about pricing and the rate they need, and that residents also need to understand the premium they may have to pay for living in higher risk areas.
Beyond products required for California, the immediate need for product innovation in the renewables sector was raised.
Aon's Henderson said the growth of the renewable energy market will require a tenfold increase in capacity from current levels in the insurance industry to serve this market sufficiently.
"We will need innovation and products geared towards both nature-based solutions and renewables", she said, adding that it's difficult for investors to price new projects in these markets, a problem for which insurance can help provide a solution.
"The requirement for climate innovation in insurance is critical to ensure we have a seat at the table for the wider economic transition."
In a session on industry collaboration on net zero and transitioning underwriting portfolios, Andrew MacFarlane, head of climate at Axa XL, said that as new climate-related technology is created, insurers will not have the years of loss data they normally require to decide on providing cover, and that insurers will need to consider how to adapt to requests to cover these new products.
Blue carbon
Another session that honed in on Bermuda's chance to be a global centre of climate excellence was on 'blue carbon'.
The latter typically refers to ocean-based projects whereby marine biological processes are deployed to absorb carbon from the atmosphere, including for example using marine life to undergo photosynthesis at the ocean surface.
Many of these are still in the testing phase, but once they're up and running and scaled, they could present a major opportunity for Bermudians in terms of covering the projects, but also through the insurance of purchasing carbon credits.
At the conference, Conduit Re executive chairman Neil Eckert noted that Bermuda has "a monumental opportunity" in blue carbon, both as an insurance hub and as a catalyst for the trading of carbon credits.
He explained that Bermuda is perfectly placed to take this role as it has a (re)insurance industry, a financial market and a well established regulatory framework.
Eckert said the key to seizing this opportunity will be the ability to attract capital and robust validation of the methodologies involved in these projects, which will be required for carbon credit trading.
"You need capital to do some of that (validation) and the legal work. This is nascent, and we need the scientists to explain the data around this, then (as insurers) we can start to do our job."
On the larger task required, he added: "We need to pull carbon out of the atmosphere on scale that has not even been imagined before."
