The Royal Gazette
Opinion (10 October, 2007)
The past several weeks have seen a renewed focus on the relationship between international business and the PLP Government. This debate was re-ignited after anonymous comments expressing concern over Bermuda’s political leadership made at an influential annual gathering of reinsurers were printed in several international reinsurance publications.
Local attention on this issue has been intense, with good reason; international business directly impacts every Bermudian’s quality of life, whether you are employed in it or not. Indeed the long overdue detailed breakdown of air arrivals reveals that business travel has even been used to mask tourism’s ongoing decline.
Generally I avoid writing on the insurance industry too directly as I work in it. Even though the opinions expressed are always my own and not those of my employer I am well aware that there are those who will attempt to use me against my employer and my employer against me. However, I believe the concerns raised recently are sufficiently important and should be addressed from the perspective of a Bermudian in the industry.
Firstly, on Friday September 28th, 2007, The Royal Gazette published a column by an anonymous senior Bermudian reinsurance executive entitled “External Threats, Internal Challenges”. This column addressed a potential business ‘exodus’ from Bermuda. I was subsequently informed by a number of people that it was alleged on a radio talk show, by PLP candidate Laverne Furbert, that I was in fact the author of this article.
Let me say definitively that I was not the author, nor was I privy to its composition. I, like everyone else, read the article for the first time on the morning of September 28th.
The predictable attempt to ‘out’ the author entirely validates the writer’s desire to protect their identity; it’s precisely why those reinsurance executives at Monte Carlo spoke off the record. This retributive behavior is contributing to a climate of unease among those within our largest industry, both Bermudian and otherwise.
I can think of many Bermudians insurance workers who share the sentiments of that article but wouldn’t want their names attached to it for fear of retaliation against themselves and/or their employers. As someone who puts his name on his opinions daily, I understand this concern as I am the target of this at times, but at some point we must stop being scared of our shadows and speak up.
Where are the young Bermudians in International Business in this debate? There are many, many of us working our way up through the industry quite successfully at various levels – with no help from the Government – who are far more qualified to discuss this topic than Cabinet and their advisors; few who possess more than a superficial understanding of Bermuda’s biggest economic engine.
As a young Bermudian reinsurance underwriter, I regularly meet with international clients, brokers and competing reinsurers. So I was not at all surprised to read the comments in The Royal Gazette articles entitled “Prepared to take flight: Bermuda's $64bn reinsurance community unhappy with Island situation - new report” and “More claims of discontent among reinsurers”, although the phrase ‘preparing to take flight’ is a bit of an overstatement.
It is indisputable that the impact of term limits, the precedent setting deportations of several non-Bermudian workers for minor issues, threats to prohibit car ownership by non-Bermudians, Ministerial warnings to non-Bermudians to stay out of politics (ie. by all means publicly agree with the Government but never dissent) and Dr. Brown’s intensely adversarial approach has created an environment of unease among our billion dollar corporations.
This is discussed within the industry regularly, both informally and otherwise. Mr. Ed Noonan of Validus Re was recently reported as characterising the chatter as “bar-talk”, prompting the Premier and his proxies to spin away the concerns as those of people “who had been drinking”.
Here’s where it’s useful to actually understand how the industry works; conversations and discussions aren’t limited to set agenda meetings in a board room. Bermuda’s companies are friendly but fierce competitors who operate in a small market. “Bar talk” doesn’t mean getting full hot; it means casual but frank conversations about issues facing the industry as whole conducted outside of regular business hours, versus the specifics of an individual business deal.
No-one schedules an open session at a conference entitled “Threats from the Bermuda Government”, but you can be absolutely sure it comes up afterwards. Just as many important discussions are held and relationships solidified on a golf course or over dinner, “bar talk” plays a major role in this industry, both as a networking tool and a way to discuss broad concerns and sometimes vent. If you doubt that assertion, take a wander over to Little Venice Wine Bar any day after 5:30 and see it for yourself.
It is also undeniable that Bermuda’s international businesses, which are broader than just insurance, are moving jobs out of Bermuda. This is due to basic economics but also a hedge against the increasingly hostile political climate which is hamstringing companies’ ability to compete, hire and retain key staff. These policies seem designed to generate a political rallying cry for rallies which the industry is asked to finance through political donations while being told to stay out of politics.
The Premier’s recent speech in Washington DC about a program labeled as Goodwill Plus, whereby every expatriate employee has a Bermudian college graduate attached to them to succeed them in 3 years, simply put an exclamation point on the lack of realism and pragmatism in the election year policies which are being rolled out.
Goodwill Plus should be called Opportunities Lost; it is at best naïve, at worst disingenuous. Either way it’s counterproductive.
As a Bermudian in the industry who would like to see other Bermudians continuing to benefit from it, it is clear to me that young university educated Bermudians hoping to pursue a career in insurance will in fact suffer if this policy is ever acted on (versus just hyped before an election).
Term limits are equally as counterproductive as Goodwill Plus. The cumulative effect of all of this politicking, and the never-ending scandals, is a drastic reduction in Bermuda’s attractiveness as a long term business home.
Talk about replacing experienced and skilled ‘Sven’ with fresh out of college ‘Johnny’ is little more than political headline generators which will not achieve the professed results for a number of reasons, some obvious others not.
Firstly, it seems to be treated as a given by the Government that businesses in Bermuda are discriminating against Bermudians. But with the Government admitting that the public education system is grossly inadequate – and has been for some time – and has labeled young black males as a problem, it seems rather unfair and insincere to then put the blame on employers for not having enough senior Bermudians (of any race) in their ranks.
An objective observer would most likely conclude that businesses are being handed a problem rather than creating one. Politicians are motivated to shift blame for this, at least the ones running for re-election are, which is why departing MP Renee Webb felt free to point out that we have to deal with education first before we can claim rampant discrimination.
Secondly, international business, and insurance in particular, is an industry that is built on relationships and experience, not ‘jobs’. We as Bermudians must stop thinking about ‘jobs’ and start thinking about careers, relationships, experience and credibility. This takes time. Goodwill Plus talks about 3 years; 10 to 15 is more realistic.
And bear in mind that Bermuda’s insurance and reinsurance industry really only began to ramp up rapidly in the last 15 years, at which point Bermudians began to transition out of tourism and into business roles. A massive culture shift had to occur as well as re-calibration of skills.
Thirdly, Bermudians working in the industry in Bermuda have a much better chance to advance because our companies currently locate their most senior staff here. The key decision makers and most valued employees in our billion dollar companies are interacting on a daily basis with entry level staff in a way that does not occur in North America, Europe or Asia.
While every Bermudian should spend time overseas building up experience prior to returning to Bermuda (hence the need for an EU passport) those of us working on island should exploit the unique opportunity to be exposed to key figures in the global financial services industry. The value of that is unquantifiable.
Fourthly, the cumulative effect of forcing companies to terminate experienced and skilled non-Bermudian staff after 3 years in the Sven example or 6 years for term limits will drive key positions to the many competing jurisdictions where our companies already maintain a presence; jurisdictions that are anxious to erode Bermuda’s dominance as a global financial market. Sven will never get here, so who is Johnny going to be attached to?
A key employee in this industry is someone who can generate tens or hundreds of millions of dollars of revenue and/or investment for their firms. When they are re-located, so will the positions around them; resulting in opportunities lost for Bermudians. And if we’re honest, one of the hardest things for our companies to do is retain Bermudians, they are in such demand.
I wonder how – with this phenomenon already occurring in a low-key manner – the next generation of Bermudians will be able to enter the business that fuels our economy the way I did. The vital entry level professional positions are moving elsewhere.
The associated promising career paths are shifting to Dublin, Zurich, London, New York, Halifax or even Waterloo Ontario. Ten to fifteen years later those non-Bermudian beneficiaries might end up here in the top level positions that remain on island, positions which Bermudians could have previously aspired to.
Furthermore, the net impact of this is that we will begin to push Bermuda back to a model which we’ve successfully moved away from, much to our benefit. Bermuda is far better served by having companies with a genuine physical presence and the accompanying skilled analytical, actuarial and management roles, rather than by driving those elsewhere and being attractive as a holding company location only. That model holds less benefit for us economically and re-invites intense scrutiny as a tax haven.
The Bermudians in international business can’t remain silent. There are plenty of us methodically working our way up through the ranks quite successfully; I interact with them in Bermuda and overseas and see them handling important financial deals.
Those of us in this industry have not been called on by the Government in this discussion, and we can’t sit idly by as observers. We are in fact far more knowledgeable about this topic than those who keep telling us what is good for us. We deserve a voice.
There are many Bermudian success stories in the industry, and we can tell the Government a thing or two about what should and should not be done, about what is and isn’t helpful. Chasing away broad economic opportunities for present and future generations of Bermudians in an effort to secure another political term isn’t productive.