You already know that Bermuda is the jewel of the Atlantic. But you will be less aware of how precious it is to us British.
It is not just the shared history and the legacies of democracy and law. It is precious to us because of our shared culture. We both think of the same things as decent.We both treasure free speech and we respect the same institutions. We are the same people, it’s just you have double our GDP per capita, better weather, and pristine beaches![1]
I am not only honoured to be given this opportunity to talk to you. It is a personal pleasure. So once again, thank you.
This may be my first visit to Bermuda, but I already feel at home. Because as I look around the room, I see many firms I recognise as my own members. AIG & Validus[2]; Antares; Arch; Aspen; Assured Guarantee; Chubb; Convex; Hannover Re; Hiscox & Sirius Point. The fact that so many ABI members are here proves the close relationship between the insurance sectors in the UK and Bermuda.
It also emphasises the international nature of the re-insurance business. As a trade association, our fundamental role is to serve our members by acting as a convenor. We bring together our members with one another, with government, with regulators, service providers and yes, potential customers.
Done right, this convening brings enormous value to our industry and can make a profound, positive impact on our society. This is the power of what I like to call “strength through association” and it is the reason I am here in Bermuda.
The ABI and ABIR have a long history of collaboration. As trade associations, we want to help our members take advantage of the synergy between the Bermuda and UK industries.
I am delighted to announce that today the ABI and ABIR have signed an MOU to strengthen our partnership and deliver even more value to our respective members.
The MOU covers three priorities common to our industries.
- Sharing knowledge of firms’ efforts to tackle climate change;
- Protecting our customers and ourselves from the growing cyber threat; and
- Attracting the brightest and best to work in our industry.
I am going to touch on all three topics but my focus will be on cyber, a threat that is growing exponentially.
How we will focus our industries efforts in the face of climate change
We all know too well the impact of climate change for our businesses and our customers.Globally, the insurance industry is in a unique position to build resilience to climate shocks and to support the transition to Net Zero.
Let me share just one example of how our strength through association can make an impact.
The UK needs investment in what we call green and good projects. More sustainable housing. Renewable energy.Electric charging networks. Impending changes to the UK’s Solvency II regime will enable our industry to invest £100bn in these kind of projects over the next ten years.
I’m proud to say we’ve launched an Investment Delivery Forum to bring together members, experts, the regulator and the investment community to make this happen. These investments are good for the economy and the environment. And show the power of our industry as a transformational force for good.
So, before I move on, let me ask you this.
These huge infrastructure projects need investment. They also need insurance. Is there an opportunity for Bermuda based firms to participate?
How we can protect our customers and ourselves from the growing cyber threat
Cyber-crime is on course to become the largest threat our customers are facing. Unlike other forms of crime it is not a question of whether our customers are being attacked…every business is being attacked, all the time.
The tiniest wordpress websites are targeted hundreds of times a day. Our largest customers are being attacked by hacking bots, millions of times a day. It only takes one vulnerability - one weak password, one unprotected home computer – for criminals to gain access. The cost to a single corporation could be in the billions.
Let me share a Ransomware example.
JBS is the world's largest meat processing company. Founded in 1953, this small family-owned business in Brazil now operates globally with group revenues in the region of 70 billion dollars. On 31 May 2021, JBS was hit by a ransomware attack by REvil – a cyber-crime syndicate known for extorting large payments from its victims.[3]
The attackers gained access to the corporation’s systems through the software used by a 3rd party vendor to remotely manage JBS’s computer infrastructure. JBS was forced to shut down operations at its plants in the United States, Canada, and Australia. How can this type of cyber-attack bring a physical business like meat processing to a halt?
In the Australian operation, cattle are processed; and when the cuts of meat reach the end of the production line they are issued a certification barcode. REvil’s attack focused on these certification computers. It took down the ability of JBS to certify its meat as fit for sale. Production stopped and more than 7,000 workers were stood down.
The company estimated that the attack would cost it $1 billion in lost sales and repairs. So it chose to pay the hackers $11 million in Bitcoin to regain control of its systems.
In the first six months of this year, ransomware victims paid nearly half a billion dollars.[4] By 2031, ransomware is predicted to cost businesses more than $265 billion per year.[5]
Today this rapid growth is driven by Ransomware-as a service.
It is about to get much, much worse. Every part of an attack will be made faster by using an AI. Experts predict that by 2031 there will be a successful attack somewhere in the world every 2 seconds. But the scale is not the only danger.
Hackers like REvil concentrate risk: REvil’s strategy was to identify a common potential vulnerability in a single industry. In this case it was the certification cycle in food production. They tried to hack dozens of food producers. JBS was the one with the gap in its defences.
Imagine what could have happened if they had been successful against several firms in the same industry on the same day. The concentration of cost to the insurance industry could have been brutal.
It is time that we all looked at our exposure to this form of concentration.The answer for our clients to more cyber crime cannot solely be “more insurance”.But that does not mean that we should stand back. Only the insurance industry sees almost every cyber strike - so we have the knowledge.
We want to protect our customers - so we have the incentive. And by our strength through association - by sharing data and working with the intelligence services - we have the capability.
So, no, we are not going to stand back. We are stepping forward. Let me talk about what “Stepping forward” means and the role Bermuda could play.
Bermuda has an insurance industry for a reason. It has a regulatory environment built on the back of centuries of sound jurisprudence. It has a government that is committed to tackling the threat of cybercrime. But most importantly, it is the perfect nexus between the UK and US industries, witnessed by the overlapping memberships of the two trade associations in the room with you today.
Stepping forward means better defences.We must all… every company, every supplier and every employee, adhere to higher security standards.
Stepping forward means getting pro-active. The ABI, for example, has launched a Cyber Safety Tool, targeted at small businesses to help them assess their cyber risks and receive tailored guidance on how to stay safe.
And stepping forward means that we must collaborate. As the National Cyber Security Centre and UK Information Commissioner’s Office put it, “keeping a cyber attack secret helps nobody except the perpetrators.”
We need aggregated incident data to help quantify the threat.
We need intelligence on individual attacks on a real time basis so that all other companies can defend themselves against an imminent attack.
The ABI is at the forefront of such initiatives in the UK Insurance Industry. But evil doesn’t care where you are. I want to see Bermuda, ABIR, the ABI and all our members sharing information to defend ourselves against this scourge.
How we can attract the brightest and best to work in our industry
Onto our last topic.
I think of Diversity, Equity and Inclusion as a roadmap to how we can attract the brightest and best from all corners of our society.
Last year, the ABI launched our DEI Blueprint – the first of its kind in the UK financial sector. The blueprint sets out the practical steps firms can take to ensure we attract and retain the talent we need.
In Bermuda, ABIR and its members should be proud of the excellent work you are doing to attract the next generation of leaders, including your partnership with Bermuda College and the internships you are making happen across the island.
Our MoU means that we can learn from each other, share best practice and together do all that we can to make insurance a vibrant, world-leading industry.
Conclusion
It is my honour to be an ambassador for the UK insurance sector.
I am not only proud of what we do but of the way we do it.
Insurance is the business of managing risk. We deal with downsides and disasters. And while it is not in our nature to celebrate what we do. Let me tell you why we should.
As senior insurance executives, we hold a powerful position. Our choices impact families, businesses, and communities. It's not just about policies and premiums; it's about the trust placed in us by millions.Every decision we make reaffirms that trust, securing futures and providing peace of mind.
You're not just executives. You are stewards of an ancient legacy, a legacy of protection, and resilience. Under our leadership, dreams are safeguarded, businesses thrive, and when life takes an unexpected turn, we're there to ensure the story continues.
Each one of you should feel immense pride.
You should be proud that you are leading our industry’s efforts to tackle climate change. Proud that you are leading a sector that is committed to becoming one of the most diverse. Proud that you lead businesses that transform our society for the better, and rebuild lives one claim at a time.
So please take a second to raise your glasses with me.
Here’s to the leaders in this room, to the impact we've made, and to the future we're building together.
Thank you.
[1] Bermuda has GDP per capita of $81,800 as of 2019. In the UK, GDP pre capita is $41,600 as of 2020. https://www.mylifeelsewhere.com/compare/bermuda/united-kingdom
[2] Validus was absorbed into AIG Re in 2018. They write Cyber as part of their Speciality Reinsurance division.
[3] https://www.meatpoultry.com/articles/25834-oversight-committee-releases-more-details-on-jbs-cyberattack
[4] https://www.wired.com/story/ransomware-attacks-rise-2023/
[5] https://cybersecurityventures.com/ransomware-report-2021/