The Island That Sells Disaster: How a Barren Rock Ringed by Shipwrecks Became One of the Richest Places on Earth

Bermuda has no rivers, no natural resources, and a coastline that has swallowed hundreds of ships. It was founded, by accident, in a hurricane. And somehow this tiny volcanic rock turned catastrophe itself into the most profitable business it could possibly have — becoming the place the whole world quietly turns to when disaster strikes.

Here is a puzzle. Take a speck of land in the middle of the North Atlantic, barely 54 square kilometres in all, a thousand kilometres from the nearest coast. Give it no oil, no minerals, no farmland to speak of — not even a single river or freshwater lake. Ring it with reefs that have wrecked ships for four centuries. Then ask: how does a place like that become the third-richest on the planet, with a GDP per person of nearly $139,000?

The answer is the most surprising thing about Bermuda, and it is hiding in plain sight in the island's own history. Bermuda did not get rich in spite of disaster. It got rich by selling it.

Born from a storm

Bermuda's story begins, fittingly, with a catastrophe.

In the summer of 1609, a fleet of nine English ships set out for Jamestown, the struggling two-year-old colony in Virginia, loaded with the supplies and settlers needed to keep it alive. Leading them was the flagship Sea Venture, under the command of Admiral Sir George Somers. A week short of Virginia, the fleet sailed into a hurricane. The ships were scattered; one sank with all hands. The Sea Venture, its new caulking working loose in the pounding seas, began to flood faster than the crew could bail — the water in the hold rose past nine feet as everyone aboard, admiral included, took turns at the pumps.

With the ship failing, Somers spotted the reefs of uninhabited Bermuda and made a desperate choice: he deliberately drove the Sea Venture onto the rocks to keep it from sinking in open ocean. The gamble worked. All roughly 150 people aboard survived, wading ashore onto an island no one had settled. They spent some ten months as castaways, built two new ships from the wreck and the island's cedar, and most of them sailed on to Jamestown — arriving to find the colony reduced to about sixty starving survivors.

The wreck became legend. Survivors' accounts of the storm and the strange, providential island made their way back to London, and one reader turned them into a play about a magician, a shipwreck, and an enchanted isle: William Shakespeare's The Tempest. Before Bermuda was a country, a company, or a tax haven, it was a shipwreck famous enough to inspire a masterpiece. The island was, quite literally, founded by a storm.

A barren rock

The land those castaways stumbled onto had almost nothing to offer.

Bermuda is the top of an extinct volcano — a seamount that rose from the Atlantic floor, was capped with limestone built up from marine life, and is now the most northerly place on Earth where coral reefs grow, kept just warm enough by the Gulf Stream. What breaks the surface is a curl of 181 islands and islets adding up to that tiny 54 square kilometres. There are no metals to mine, no fossil fuels, and thin soil that supports very little farming; today agriculture accounts for a rounding error of the economy.

Most striking of all, Bermuda has no fresh surface water at all — not one river, not one natural lake. For four hundred years the solution has been architectural: the island's distinctive white, stepped limestone roofs are not just decoration but rain-catchers, designed to funnel every drop of rainfall into underground tanks for drinking. A place that cannot even supply its own water is not an obvious candidate to become one of the wealthiest societies on the planet.

The graveyard of the Atlantic

And then there are the reefs — the same ones that caught the Sea Venture.

The shallow, jagged coral rings that surround Bermuda have been snagging ships since Europeans first found the place. Over the centuries more than three hundred wrecks have piled up on the seabed around the island, making Bermuda one of the great ship graveyards of the world. For most of history that was pure menace: a hazard that killed sailors and sank cargoes.

But watch what Bermuda did with it, because it is the whole story in miniature. Those three hundred wrecks are now one of the finest wreck-diving destinations on Earth, drawing divers and their money from around the world. The island took a catastrophe — a coastline that destroys ships — and quietly turned it into an industry. It is a habit Bermuda would eventually raise to an art form.

(It is worth pausing here to dispatch the island's most famous "disaster" of all: the Bermuda Triangle, that supposed patch of ocean where ships and planes vanish. It makes for great television, but there is no statistical mystery behind it. The region is heavily travelled and storm-prone, and careful analyses have found that vessels and aircraft go missing there no more often than in any comparably busy stretch of sea. The real Bermuda didn't need a supernatural disaster industry. It built a very real one.)

The pivot to selling disaster

By the twentieth century, Bermuda had the ingredients to reinvent itself: political stability as a British territory, a convenient location a short flight from the US East Coast, and — crucially — no income tax, no corporate tax, and no capital gains tax, paired with regulation designed to be light but credible. What it lacked in natural resources, it could offer in financial ones.

The island first became a home for "captive" insurance — companies setting up their own in-house insurers — and then made a far bigger leap into the business that would define it: reinsurance. Reinsurance is, in a sentence, insurance for insurance companies. When an ordinary insurer sells millions of home or business policies, it protects itself against a single catastrophe wiping it out by buying its own coverage from a reinsurer. When a hurricane flattens a city and the claims flood in, reinsurers are who ultimately foot much of the bill.

Bermuda set out to become the world's warehouse for exactly that kind of risk — the catastrophic, once-in-a-generation kind. And it discovered something remarkable about the economics of disaster.

The classes of disaster

Every so often, a catastrophe is so vast that it overwhelms the world's insurers, drains the industry's capital, and sends the price of coverage soaring. In that moment, investors go looking for somewhere to park fresh money and start new companies to sell newly-expensive protection. Again and again, that somewhere has been Bermuda — so reliably that the island's insurers are grouped into "classes," like graduating cohorts, each named for the disaster that created it.

The pattern was set by Hurricane Andrew in 1992, at the time the most expensive natural disaster in history, causing around $15.5 billion in insured losses and pushing roughly thirteen US insurers into bankruptcy. Into that gap poured some $4 billion of new capital and a wave of brand-new Bermuda catastrophe reinsurers — the "Class of 1993," including names like RenaissanceRe, PartnerRe, and Mid Ocean Re. One of them, in a detail almost too perfect, was christened Tempest Reinsurance — a company born of a storm, on the island born of a storm, named for the play born of its shipwreck.

Then came the terrorist attacks of 11 September 2001. As billions drained out of the global market, more than half of all the new reinsurance capital raised worldwide flowed into Bermuda — roughly $8.5 billion — creating the "Class of 2001," with firms such as Arch Capital, AXIS Capital, Allied World, Endurance, and Montpelier Re. Four years later, the brutal 2005 hurricane season of Katrina, Rita, and Wilma inflicted somewhere between $65 and $90 billion in insured losses — and summoned the "Class of 2005," which drew about $13 billion from investors into new Bermuda start-ups like Validus, Lancashire, and Ariel Re.

Look at that sequence closely and the strangeness of Bermuda's fortune comes into focus. For almost any other place, a hurricane or a terrorist attack is a wound. For Bermuda, each global catastrophe has been a growth event — a fresh surge of capital, companies, and talent washing onto its shores. The worse the disaster, the more the island's core industry expands. Bermuda now has the highest concentration of actuaries, underwriters, and insurance specialists per head of population anywhere on Earth. It is not a coincidence; it is a business model. The island's product is, in the most literal sense, other people's disasters — priced, packaged, and paid out.

The richest barren rock on Earth

The result is one of the most improbable economies in the world. That resourceless volcanic rock with no rivers now posts a GDP per capita of nearly $139,000, third-highest on the planet, generated by an economy that is more than 90 percent services and almost entirely built on insurance and finance. A place that grows essentially nothing sells one of the most valuable services in the global economy.

For decades the engine was fuelled partly by Bermuda's famous zero-tax regime — no corporate income tax, no personal income tax, no capital gains tax — which drew the world's risk capital to its shores and earned it, depending on your point of view, a reputation as either a nimble financial centre or a tax haven. That model is now adapting to international pressure: to comply with the OECD's global minimum tax agreement, Bermuda introduced a 15 percent corporate income tax from the start of 2025 — but only for the very largest multinational groups, those with revenues above €750 million, while smaller and local companies keep the traditional zero rate. Even in changing, the island is doing what it has always done: bending just enough to survive, and no more.

Disaster as a natural resource

Trace the whole arc and it forms a single, elegant loop. Bermuda was created by a hurricane that wrecked a ship. It sits on a barren rock that provides neither water nor materials. It is fringed by reefs that have sent hundreds of vessels to the bottom. By every conventional measure, nature dealt it nothing. So the island took the one thing it had in abundance — catastrophe — and made it the foundation of its wealth, first turning its shipwrecks into a diving industry and then turning the entire world's shipwrecks, hurricanes, earthquakes, and disasters into the reinsurance business that made it rich.

When a storm tears through a coastline somewhere on the planet and, months later, the money arrives to rebuild, a surprising share of it can be traced back to a tiny island that manufactures almost nothing but the pricing of ruin. The place that began as a shipwreck now sells the world its insurance against shipwreck. Four centuries on, Shakespeare's tempest has become a balance sheet — and disaster, the thing Bermuda was given more of than anything else, turned out to be the most valuable natural resource it never had.

Sources and further reading

• "Economy of Bermuda," Wikipedia, and Bermuda government statistics — GDP (~$9 billion, 2024), GDP per capita (~$138,935, third-highest globally), and the services-dominated economy.

• Association of Bermuda Insurers and Reinsurers (ABIR), "World's climate risk capital" — the "Class of 1993," "Class of 2001," and "Class of 2005," and the capital raised after Hurricane Andrew, 9/11, and the 2005 hurricane season.

• Insurance Information Institute, "Bermuda" (The Global Dimension), and the Cummins report The Bermuda Insurance Market — the island's evolution from captives to catastrophe reinsurance and its share of global capital.

• Bernews and Encyclopedia Virginia on the Sea Venture (1609), Sir George Somers, and the shipwreck's link to Shakespeare's The Tempest.

• Geographic references on Bermuda — the extinct volcanic seamount, the most northerly coral reefs, the absence of fresh surface water and the rain-catching roofs, and the 300-plus shipwrecks on its reefs.

• Tax Foundation and Bermuda's Corporate Income Tax Act 2023 — the 15% corporate income tax effective 1 January 2025 for large multinational groups under the OECD Pillar Two global minimum tax.