Bermuda Insurance Act Reforms
The Premier and Finance Minister said amendments to the island’s Insurance Act passed by Parliament last night [Dec. 9] strengthen both Bermuda’s regulatory regime as well as its competitive advantage.
Premier Paula Cox said ongoing reforms and upgrades to Bermuda’s off-shore re/insurance regulatory framework to keep current with international best practice were increasingly necessary.
“Mr. Speaker, the global financial services market is highly competitive and companies will seek to use a variety of elements to support their business objectives at any given time — that includes choice of domicile,” she said. “While some of our competitors demonstrate much strength, Bermuda has a compelling and timely story to tell. On insurance supervision, the goal is to maintain a pragmatic regulatory framework that works for Bermuda which can also be regarded as equivalent to other jurisdictions.
“Mr. Speaker, every aspect of our financial services policy objectives is designed to emphasise that a competitive, efficient, and stable financial centre operating with integrity is in Bermuda’s best interests. International companies have long invested in the Bermuda marketplace because our markets are safe and profitable while the regulatory environment is prudent, but fair and flexible.”
The Premier’s Full Statement to Parliament Appears Below:
The Insurance Amendment Act 2011
INFORMATION STAGE
Mr Speaker, the Bermuda Monetary Authority has been engaged in a comprehensive program of regulatory reform for a number of years. For the insurance sector, the reforms are oriented around several key objectives to ensure that Bermuda’s insurance regime can be developed in a way that would more easily facilitate the supervision of this sector.
Mr Speaker, the Authority has achieved significant progress with its insurance regulation enhancements. Compliance with the EU Solvency II Directive is a key priority for the Authority as well as the commercial insurance sector. Compliance with Solvency II would permit Bermuda based insurers to operate in the European market without additional regulatory hurdles. In order for Bermuda to succeed, the insurance regime must be brought into compliance with the Solvency II Directive.
Mr Speaker, certain reforms aiming at the Solvency II Directive are already adopted or in force. However, the reform process is ongoing. The first phase, a desk-based assessment, was completed at the end of January 2011. The second phase, an on-site assessment, was completed on 3rd June, 2011. The preliminary assessment indicates that Bermuda’s regulatory regime for commercial insurers Class 3A, Class 3B, and Class4 insurers meet the criteria for Solvency II equivalence, with certain caveats. The Authority continues to review the issues raised during the European Insurance Occupational Pensions Authority’s [EIOPA] assessment and will be carrying out further consultations with industry about changes to different aspects of our supervisory regime.
Mr Speaker, the purpose of the Bill is to amend the Insurance Act, 1978 and make consequential amendments to the Insurance Accounts Regulations, 1980, to make a number of changes to the regulation of insurance business the substantive measures of which are set out as follows:
- the Bill clarifies the nature of insurance groups in Bermuda;
- the Bill imposes requirements on certain classes of insurers which were previously only applicable to Class 3B and Class 4 insurers;
- the Bill clarifies the Authority’s powers to grant exemptions from certain standards;
- the Bill makes adjustments for certain classes of insurers regarding the requirement to maintain a minimum margin of solvency;
- the Bill expands the nature and scope of a principal representative’s reporting powers;
- the Bill introduces a more favourable prorated registration fee and also modifies the circumstances under which the Authority is able to address the payment of annual fees based on new criteria;
- the Bill changes the Authority’s inspection powers;
- the Bill makes provision for a “safe harbor” from certain penalties to be extended to certain new classes of insurers which is already provided to existing classes of insurers;
- the Bill modifies clarifies the appeal provisions to only apply to a registered insurer where applicable; and
- the Bill provides for a commencement date of 31st December, 2011.
Mr Speaker, the global financial services market is highly competitive and companies will seek to use a variety of elements to support their business objectives at any given time – that includes choice of domicile. While some of our competitors demonstrate much strength, Bermuda has a compelling and timely story to tell. On insurance supervision, the goal is to maintain a pragmatic regulatory framework that works for Bermuda which can also be regarded as equivalent to other jurisdictions.
Mr Speaker, every aspect of our financial services policy objectives is designed to emphasise that a competitive, efficient, and stable financial centre operating with integrity is in Bermuda’s best interests. International companies have long invested in the Bermuda marketplace because our markets are safe and profitable; while the regulatory environment is prudent, but fair and flexible. Without question, the competitive environment facing our workers and businesses is challenging. Many competitors have followed our lead in reforming their economies. Now they are competing with us for businesses, capital, and jobs – not only around -the world but right here in our country. Bermuda faces a choice – to reach out and seize the benefits of international engagement, or retreat into isolationism. This choice is central to the competitiveness of the Bermudian economy and the hopes of hardworking Bermudians.
Mr Speaker, the Bill is fully consistent with our financial services policy objectives.
Mr Speaker, I wish to acknowledge the sterling efforts of the Authority, the insurance sector including but not limited to the Association of Bermuda Insurers and Reinsurers, the Bermuda Insurance Management Association as well as the Insurance Advisory Committee and the Attorney-General’s Chambers in preparing this critical piece of legislation for your consideration today.
Thank you, Mr Speaker.
