Bermuda needs economic citizenship

Insurance icon Brian Duperreault has called for a “more open” immigration policy “of inviting people with money and ideas to live in Bermuda”.

Mr Duperrault, CEO of Hamilton Insurance Group, made that statement tonight at the Bermuda Insurance Institute’s Awards dinner.

It is the first time he has spoken since completing his work as chairman of the SAGE Commission. 

He said there are some indications that Bermuda’s economy is in the beginning of a turnaround but the “shoots of recovery are tender and green. Like other countries, we have social challenges and polarized politics. We can’t ignore these realities in our eagerness to get the economy back on an even keel”.

Mr Duperreault said even with the beginning of a turnaround starting to grow, Bermuda is “still in a state of crisis. And we’re still in decline. We’re the incredible shrinking country”.

He said to meet the challenges of the 21st-century world, we can do two things: educate our children so they have the technological skills to compete and, two, attract entrepreneurs who will stimulate innovation and creativity to diversify Bermuda’s economy. 

He said immigration has “a unique opportunity to move Bermuda forward. It’s not the only answer, but it has the potential to be the type of game-changing move that we must make. 

“The SAGE Commission called for a more open immigration policy, and I still believe this is the right solution for creating the numbers of jobs we need and to jump-start our economy.  

“I also think it’s the most effective way to inject an entrepreneurial spirit into the way we do business.”

Mr Duperreault said done correctly, “modifying our immigration policies doesn’t have to represent a threat to Bermudians’ birthrights”. 

He said the SAGE Commission highlighted immigration because of Bermuda’s declining population and the urgent need to generate inward investment.

Unsustainable

“In the last five years, we’ve lost thousands of residents. We can’t reproduce ourselves out of this problem. And we have an unsustainable debt that no amount of cost-cutting will resolve. 

“We need a more open policy of inviting people with money and ideas to live in Bermuda. We’ve been a pretty exclusive club up until now. I think it’s time to loosen the rules so others can join. Residence in Bermuda is still coveted. People who are discerning about where to live still put a value on living in Bermuda.”

Mr Duperreault said “We don’t have all the answers” so we should allow others to help us.

“We can make sure the quid pro quo protects Bermudians. We can make it clear that people can come, but they have to create a specified number of jobs in a specified period of time. If their company succeeds and thrives, they can stay. If not, they have to leave.

“We can enact legislation that provides for what I’ll call economic citizenship. It may not include voting rights, but it would represent a stability in employment and residence that would be very appealing to the type of people we want to attract. 

“Who knows what businesses might result from creating an incubator of intellectual capital here in Bermuda?

“I know talk of changing immigration laws alarms people, particularly when things are as difficult as they are right now. 

“When you don’t have a job, it’s hard to support making it easier for non-Bermudians to come here and work.”

He conculded by saying, “The world has changed, and it’s going to keep on changing. We have to accept that. We also need to accept that we don’t have a God-given right to anything.

“My suggestions about immigration aren’t the only answer to our problems. 

“Yes, let’s protect what we consider the essence of Bermuda, but let’s enable meaningful change to take place.” 

Full speech:

Thank you, Andrew, for that kind introduction.

Mr. Premier, Members of the Board of the BII, and invited guests,

It’s a pleasure to be here tonight, and to feel the optimism and energy in Bermuda’s insurance industry. The conversations I’ve had over dinner have reinforced my belief that the Bermuda market is strong, and viable, and competitive.

The Bermuda Insurance Institute deserves a lot of credit for that energy and optimism.  The opportunities you provide to Bermuda’s insurance professionals make a very real difference in the manner in which our industry stays current and on top of developing trends.

You help us keep our skills honed and our focus sharp. You help keep Bermuda competitive. So thank you to Dawnelle and her team, as well as the BII Board, for all that you do to support an aspect of Bermuda’s economy that is critical to the Island’s financial health.

Before I start my formal remarks, I want to add my voice to the commendations given to Robin Spencer-Arscott, Julia Henderson and Catlin.

Robin was one of the first people I met when I came back to Bermuda 20 years ago. He went out of his way to introduce me to people, and help me get my feet wet.  I’ve never forgotten your assistance, Robin, and I’ve always been grateful. Thank you.

Congratulations to Julia. Your achievements are impressive.  It’s clear you’re making a real contribution, both to our industry and to our community.

And congratulations to Catlin. You continue to set the gold standard for corporate social responsibility in Bermuda.

I think this is the first time I’ve spoken since I finished working on the SAGE Commission’s analysis of the Bermuda Government.

Most of you know that since then, I’ve started a new company – Hamilton Insurance Group.

Given all the dire comments I made about the state of Bermuda’s economy when I was chairman of SAGE, the question I’m often asked now is:

Why?

When things are so hard in Bermuda, and when the market cycle is so bad, why are you starting a new company? Why don’t you just enjoy your retirement?

There are two reasons. The first is that I love insurance. I know many of you do, too.  I love its dynamics, and the variables that affect it, and the protection it represents for communities and countries.

I entered the industry almost by accident. When I was finishing my stint in the US Army, I was looking for a job and saw an ad for actuaries at AIG.

I didn’t know what an actuary was and didn’t know anything about insurance, but I needed a job.

I applied and was offered a training position, and that was that. I was hooked. And I’ve stayed hooked ever since.

Even though I’ve “retired” twice – once from ACE and once from Marsh – the opportunity to work with the team at Hamilton was too good to pass up.

The second reason for starting a company now is that I don’t believe there’s any advantage to waiting until market conditions are just right. They never are. Something is always out of whack:  a glut of capital, too many events, low interest rates –  you know the list.

In hard markets and in soft, there will always be a reason to wait.

But if you wait, you get nowhere. And when markets turn, you’re caught flat-footed.

If you’ve got the right fundamentals in place – good people, good products, good management, and I have all of those at Hamilton – you can succeed in any market.   It’s not always easy, but it’s eminently doable.

You just have to be creative, innovative and nimble.

That question of Why?  – why take on this challenge now, when things are so difficult – is also facing Bermuda, and that’s what I’d like to talk to you about tonight.

While there are some indications that Bermuda’s economy is beginning to turn around, the shoots of recovery are tender and green.

Like other countries, we have social challenges and polarized politics. We can’t ignore these realities in our eagerness to get the economy back on an even keel.

However, as we discovered in the work we did on the SAGE Commission, the status quo isn’t going to work. The way things used to be done won’t support Bermuda’s recovery.

As a country, we have to be creative, innovative, and nimble.

Google Chairman Eric Schmidt spoke at the Kennedy Business School about a week ago and said:

“The successful entrepreneur doubles down, fights harder, leads harder, challenges harder, and eventually wins.

“The unsuccessful entrepreneur gets scared, gets tentative, loses confidence, falls apart.

“That’s the difference between $1 billion and zero.”

Bermuda’s insurance and reinsurance sectors have been pretty good at being entrepreneurial. We’ve got a great pool of talent, and we receive world-class support from the BMA, our regulatory body. That combination enables progress.

Bermuda needs to figure out how to get that entrepreneurial model embedded in the DNA of the country. This is not the time to be tentative and lose our confidence.

I know we can do this.  If we get the right people around the table, talk honestly about the issues and listen to each other, we can do this.

I’m not suggesting an endless loop of consultation. I’m saying that, as a community, let’s define what needs to be done, discuss solutions and make decisions – in a timeframe that respects the process but has the momentum that a crisis requires.

Because we are still in a state of crisis. And we’re still in decline. We’re the incredible shrinking country.

We have one healthy industry in Bermuda – insurance – and one – tourism - that’s still on life support. Insurance is subject to natural fluctuations, too, so it’s dangerous to rely on it to prop up our economy while tourism recovers.

When I came to Bermuda in 1994, I was invited to sit on a sustainable development committee. We collected data and statistics and noted the declining workforce in the insurance business. It continued to decline in ‘95 and ‘96 as the days of naïve capital came to an end.

The work that was being done was run-off work. Jobs were being lost as people were no longer needed.

The difference in 1994 was that the insurance business wasn’t Bermuda’s only healthy industry. Tourism was still pretty strong 20 years ago, employing thousands of Bermudians.

I’m not telling you anything new when I say we need a more diversified economy. We’ve been talking about this in Bermuda for years. But we haven’t made much progress.

Two things have changed since we started looking at how to create new revenue streams: our economic situation has profoundly deteriorated, and technology has redefined how business is done.

In this second decade of the 21st century, business is much more cerebral and much less manual. In our industry, it’s much less transactional.

To adapt to a cerebral world, we need to do two things:

• educate our children so they have the technological skills they need, no matter what career they choose, and

• attract entrepreneurs who will stimulate the innovation and creativity needed to diversify our economy.   

I’m not going to address the education issue. It’s a mammoth task, and it must be tackled.

But let’s look at immigration, where I think there’s a unique opportunity to move Bermuda forward.

It’s not the only answer, but it has the potential to be the type of game-changing move that we must make.

The SAGE Commission called for a more open immigration policy, and I still believe this is the right solution for creating the numbers of jobs we need and to jump-start our economy. 

I also think it’s the most effective way to inject an entrepreneurial spirit into the way we do business.

Done in consultation with the right stakeholders, modifying our immigration policies doesn’t have to represent a threat to Bermudians’ birthrights.

The reason the SAGE Commission highlighted immigration was because of Bermuda’s declining population and the urgent need to generate inward investment.

In the last five years, we’ve lost thousands of residents. We can’t reproduce ourselves out of this problem. And we have an unsustainable debt that no amount of cost-cutting will resolve.

We need a more open policy of inviting people with money and ideas to live in Bermuda.

We’ve been a pretty exclusive club up until now. I think it’s time to loosen the rules so others can join. Residence in Bermuda is still coveted. People who are discerning about where to live still put a value on living in Bermuda.

Let’s give others a chance to help us. We don’t have all the answers.

We can make sure the quid pro quo protects Bermudians. We can make it clear that people can come, but they have to create a specified number of jobs in a specified period of time. If their company succeeds and thrives, they can stay. If not, they have to leave.

We can enact legislation that provides for what I’ll call economic citizenship. It may not include voting rights, but it would represent a stability in employment and residence that would be very appealing to the type of people we want to attract.

Who knows what businesses might result from creating an incubator of intellectual capital here in Bermuda?

I know talk of changing immigration laws alarms people, particularly when things are as difficult as they are right now.

When you don’t have a job, it’s hard to support making it easier for non Bermudians to come here and work.

But here’s another thing Schmidt said at the Kennedy Business School: “A steady supply of very smart people flowing in and out” is a critical part of creating what Schmidt calls a hive of knowledge.

 “The sense of being in the middle of something great is hugely motivating to people who want to start new things.”

The Bermuda insurance market is a good example of this. The intellectual capital that’s accessible within a few blocks in Hamilton feeds innovation and creativity. There’s a reason we’re called the risk capital of the world. I know we can be the capital of other sectors, too.

In closing, just a few more comments:

The world has changed, and it’s going to keep on changing. We have to accept that. We also need to accept that we don’t have a God given right to anything.

My suggestions about immigration aren’t the only answer to our problems.

Yes, let’s protect what we consider the essence of Bermuda, but let’s enable meaningful change to take place.  

In reality, we’ve never been content with the status quo. Tourism and international business were game changers for Bermuda.

Let’s take a big, bold step. Let’s not be tentative, or scared, or lose our confidence.

Let’s show that we can make the difference between $1 billion and zero.

Thank you.