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Digital EditionWhy Risk Managers Look to Bermuda When Risk Gets Complex
Lucy Pilko leads AXA XL’s insurance business throughout the US, Canada, and Bermuda. She joined AXA XL in October 2023 from Boston Consulting Group (BCG). She was a Managing Director & Senior Partner in the New York office and led BCG’s North American Insurance Practice. Lucy brings over 20 years of consulting experience with particular focus on growth strategy, operating model and transformation for Insurance carriers and brokerage. She has worked closely with leaders from nearly all of the region’s major carriers and broking houses, helping them solve problems and uncover opportunities. Prior to BCG, Lucy was employed at Marsh McLennan and Bain Capital. Lucy has a BS in Industrial Engineering from Stanford University, and an MBA with High Distinction from the Harvard Business School, where she was recognized as a Baker Scholar.
Forty years ago, 68 of America’s largest companies contributed to the creation of a new insurance company to address a severe capacity shortage that threatened to wipe out excess liability coverage for Fortune 500 companies and collapse US insurance markets. While the name of the company, then known as X.L. Insurance Company Ltd, has changed over time and today carries the brand name of AXA XL, it remains true to its raison d’etre – to provide solutions to global companies’ most complex risks and freeing them up to do what they do best in order to meet the needs of their customers. AXA XL’s 40th anniversary marks more than a corporate milestone. It highlights how Bermuda’s insurance and reinsurance market has helped global businesses tackle complex risks for the last four decades.
A pivotal period in insurance
In the early 1980s, the U.S. liability market was under real strain. Court awards in product liability, environmental, and professional lines were high, disrupting traditional pricing and reserving. Reinsurance capacity was in short supply too. Large companies struggled to secure the limits they needed as many insurers pulled back, raised prices, cut capacity, and tightened terms, especially high-limit umbrella and excess coverage. Businesses still needed the protection that insurance offered, and Bermuda provided options.
By the mid-1980s, Bermuda had already built a strong insurance and reinsurance market, backed by pragmatic regulation that supported responsible innovation. Its corporate and tax frameworks made it attractive for setting up and managing insurance entities, and it had solid access to international capital and talent. Bermuda could offer tailored policies and structures that were hard to achieve in more heavily regulated markets. That flexibility helped pave the way for alternative risk solutions, new carriers, and Bermuda’s emergence as a global center for complex, high severity risk, the place to turn when conventional insurance models no longer fit.
When risk gets hard
The same forces that drew companies to Bermuda in the 1980s remain strong today. For many U.S. businesses, “going to Bermuda” has never been about geography. They turn to Bermuda when the domestic market cannot fully meet their needs. Perhaps they require higher limits or broader terms. Maybe they need something custom-made for complex or emerging risks.
Standard markets in the U.S. are often slower to offer very large limits or adopt innovative structures, for many reasons. Capital providers and insurers must navigate complex compliance requirements, explain unconventional products to regulators and rating agencies, and operate in an environment that favors incremental, proven solutions over capacity-heavy innovations.
Bermuda insurers built a reputation for addressing large, complex, high-severity risks. They can structure coverage more flexibly and tap global capital efficiently, giving risk managers access to tailored, high-limit solutions that supplement domestic policies or make coverage possible when U.S. markets cannot.
A defining feature of the Bermuda market is how closely it works with brokers and clients. The Bermuda market leans into helping clients innovate by working closely with them, through brokers, to co-design programs, test new structures and limits, and share risk in different ways, supporting coverage for brand new business models, emerging technologies, or intricate global risks that traditional products don’t yet reach. Bermuda is a springboard for client-centric innovation.
Bermuda may have started as a hub for speed, innovation, and additional capacity for complex risks, but today it’s a mature, stable market with a strong track record and longstanding relationships — while still preserving its entrepreneurial DNA for clients who need it. Even for more traditional exposures, risk managers value Bermuda’s long-term stability and strong claims-paying reputation and are often willing to pay a premium for that level of quality. In practice, risk managers can access both innovative and standard solutions in Bermuda, in a way that complements what they typically purchase in the US for more conventional risks.
Then and now
The parallels between the liability crisis of the 1980s and what we’re seeing today are hard to ignore. Back then, court awards were rising fast, and liabilities were expanding faster than traditional underwriting could keep pace. Today, capacity is still under strain and there are additional reasons: cyber risk with the potential for large, connected losses; weather volatility; systemic and supply chain exposures; growth in intangible assets and new business models; and shifting legal, regulatory, and social expectations.
Once again, insurers are wrestling with tough questions: how much capacity can they put out responsibly, at what price, and under what terms? Traditional structures, on their own, aren’t enough to solve these challenges. For U.S. companies, relying solely on domestic insurers can leave meaningful gaps, especially in high-limit liability and catastrophe programs. Bermuda is a market specifically designed to close those gaps.
Today, the Bermuda market is responding with the same core strengths that made it a solution 40 years ago: deep capital, specialized expertise, flexible structure, and a willingness to innovate alongside clients. While capital remains abundant across the broader market, deployable capacity for complex, high-severity, or emerging risks can be selective, particularly where large limits, long-tail exposures, or volatility are involved. Large multiline programs, extended limit towers, and structures that combine insurance, reinsurance, and capital markets are all part of how Bermuda continues to tackle capacity shortfalls. For U.S. risk managers at large companies, access to Bermuda is increasingly not just helpful, it’s becoming a strategic necessity for building resilient, comprehensive programs for complex risks.
The insurance market is at another inflection point. The last four decades have shown that innovation tends to emerge when traditional underwriting appetite becomes more constrained or selective, even when substantial capital exists elsewhere in the system. That dynamic only reinforces the value of close collaboration between clients and insurers in developing more resilient and innovative risk management strategies. Specialized platforms with strong regulation, concentrated expertise, and diverse capital, like Bermuda, are critical for addressing new, unusual and increasingly interconnected risks. As technology, climate, geopolitics, and societal expectations reshape the risk landscape, the Bermuda market is well positioned to stay pivotal to how large organizations manage uncertainty. &
