“Bermuda Has Completed Another Milestone”
With Parliamentary and regulatory action this week, Bermuda has completed another milestone on its path to recognition by the European Commission as being fully equivalent under the insurance prudential regulatory regime known as Solvency 2, ABIR said.
The equivalence effort is supported by 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].
“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,” Bradley Kading, president and executive director of ABIR said.
“ABIR members are strong supporters of the BMA’s efforts to be found fully equivalent under Solvency 2, but the real beneficiaries are EU commercial consumers which will benefit from open insurance markets.”
“With this week’s action on a package of substantive and technical amendments Bermuda has completed the legislative and regulatory action that positions Bermuda to meet the caveats on the equivalence assessment as published Jan. 30 by European Insurance and Occupational Pensions Authority [EIOPA],” Seamus MacLoughlin noted on behalf of BILTIR.
“These legislative changes are now being reviewed by EIOPA at the request of the Commission. The Commission will make its final recommendation in the fall,” he continued.
“Jeremy Cox and the Bermuda Monetary Authority [BMA] team are to be commended for timely adoption of the final economic balance sheet regulations and public disclosure legal mandate, as these were considered to be key elements of Solvency 2 equivalence,” said Robert Paton on behalf of BIMA.
The most significant legislative amendments defined a requirement of a commercial insurer to have a head office in Bermuda; and created authority for new public disclosure requirements for commercial insurers.
The regulations amended the existing economic balance sheet rules to expand the framework to life/long term insurers, to make technical amendments to the Bermuda Solvency Capital Requirement formula and spelled 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.
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. Here are excerpts regarding the benefits for European consumers from some of those public comments:
“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
