A bulletin from Bermuda notes that the island’s parliament took regulatory action this week to align its regulatory insurance procedure. The goal: recognition by the European Commission as being fully equivalent under the pending Solvency II rules.
The measure has the support of Bermuda’s leading insurance associations: the Association of Bermuda Insurers and Reinsurers (ABIR); the Bermuda International Long-Term Insurance and Reinsurance Association (BILTIR); the Bermuda Insurance Management Association (BIMA); along with the Bermuda Business Development Agency (BDA).
According to the bulletin, the new regulations amend the existing economic balance sheet rules to expand the framework to life/long term insurers. They also make technical amendments to the Bermuda Solvency Capital Requirement formula and spell out financial condition public disclosure requirements. Bermuda’s equivalence application covers the commercial insurance market, both life/health and property/casualty; based on the definition of “commercial” it excludes most captive insurers.
Bradley Kading, president and executive director of ABIR, said that the results will be helpful to all parties involved.
“Equivalence findings of third countries help promote transparent and comprehensive regulation of non-EU groups with European Union (EU) business operations and encourage cross border reinsurance trade which promotes greater competition and value for EU consumers in insurance markets,” Kading said in prepared remarks.
Robert Paton, commenting on behalf of the BIMA, commended the efforts of Jeremy Cox and the Bermuda Monetary Authority (BMA) team for their “timely adoption of the final economic balance sheet regulations and public disclosure legal mandate, as these were considered to be key elements of Solvency II equivalence.”
Kading noted in the EIOPA equivalence consultation (completed in early 2015) that “supportive letters from key EU stakeholders were filed in support of the Bermuda application for full equivalence. Included were letters by: Lloyd’s of London, the International Underwriting Association, the Association of British Insurers, Insurance Europe, Federation of European Risk Management Associations (FERMA) and Guy Carpenter.”
Excerpts from the letters were attached to the announcement, as follows:
- “Lloyd’s positively supports Bermuda’s granting full equivalence to Solvency II. We believe this would strengthen the enduring partnership between EU insurers and the Bermudian insurance market as well as ease the transaction of business between the European Union and Bermuda.” Excerpt, Lloyd’s of London, public statement, Jan. 23, 2015
- “The risk coverage of European large corporations would be positively impacted and strengthened by an equivalence decision from the European Commission based on the EIOPA report on equivalence advice for Bermuda.” Excerpt, FERMA, Jan. 23, 2015
- “Insurance Europe welcomes EIOPA’s assessment regarding the equivalence of Switzerland (under Articles 172, 227 and 260), Bermuda (under Articles 172, 227 and 260) and Japan (under Article 172). These three jurisdictions are important market partners for European insurers and their insurers provide capacity and diversification, which our markets need.” Insurance Europe, January 23, 2015
- Source: the Association of Bermuda Insurers and Reinsurers (ABIR)