Enduring Capacity

The Bermuda reinsurance market for medical malpractice has exploded in the past four years. There is now as much or more capacity for medical malpractice in Bermuda as there is in any of its rival domiciles.

In particular, many healthcare captives come to Bermuda for reinsurance because the parent owners are sophisticated organisations that buy extremely high limits - and Bermuda has an enormous amount of capacity to address this need from the industry.

Bermuda-based Endurance Speciality Insurance reinsures around 100 healthcare captives, most of which are domiciled in Bermuda and Cayman. These captives are owned by hospital systems, university teaching hospitals and integrated networks and many were formed back in the late 1970s and early 1980s.

According to Judy Hart, executive vice-president - healthcare at Endurance, Bermuda has a unique environment because although many of the captives the company reinsures are based in Cayman, increasing numbers of those captives are holding their board meetings in Bermuda so they can meet with their reinsurers at the same time.

"It is definitely one of the advantages of Bermuda because it is essentially a one-stop shop - clients can hold their board meetings and meet their reinsurers and underwriter. Furthermore, we have the opportunity to meet with clients face-to-face and form stronger relationships." says Hart.

Planning

Endurance works with organisations that are forming or have already formed captive insurance companies. Hart argues captive reinsurance is important for an organisation preparing itself for the long term.

"Most captives need reinsurance." she says. The captive itself retains the amount of risk the insured wants to retain themselves, and that amount depends on several variables.

These variables range from the size of the organisation, its financial position, its history, the kind of venues it has and where its hospitals are located to its financial wherewithal. So the captive typically retains the amount of risk a client would normally self-insure. Reinsurance is then provided over and above that.