Solvency II Equivalence For Insurance Sector

Minister of Finance Bob Richards provided an update on Solvency II equivalence for the Bermuda insurance market in the House of Assembly today [Nov 27].

Minister Richards said, “The Solvency II Directive introduces a modernised risk-based regulatory regime for insurance and reinsurance undertakings in the European Union [EU]. The Directive also provides for the assessment of the insurance regimes of countries outside the EU. The Directive will take effect from 1st January, 2016.

“The European Commission has determined that the regulatory and supervisory regime in force in Bermuda for insurance and reinsurance undertakings and groups should be considered to meet the criteria for full equivalence set out in the Directive. Captives and Special Purpose Insurers which are subject to different insurance requirements have been excluded from the requirement to comply with the Directive.

“The Bermuda Solvency II Delegated Act shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the Parliament and the Council have both informed the Commission that they will not object. The period can be extended by three months at the initiative of the European Parliament or the Council.

“Bermuda is in the financial services business and thousands of jobs, both Bermudian and guest workers alike, depend on the success of this sector. The Government, therefore is committed to helping Bermuda’s financial institutions succeed in global markets. This decision directly supports our commitment to the financial services sector and the livelihoods of those employed in it.”

The Minister’s full statement follows below:

Mr. Speaker, I am pleased to be able to provide the House of Assembly with an update on Solvency II equivalence for the Bermuda insurance market.

Mr. Speaker, the Solvency II Directive introduces a modernised risk-based regulatory regime for insurance and reinsurance undertakings in the European Union [“the EU”]. The Directive also provides for the assessment of the insurance regimes of countries outside the EU. The Directive will take effect from 1st January, 2016.

Mr. Speaker, the European Commission has determined that the regulatory and supervisory regime in force in Bermuda for insurance and reinsurance undertakings and groups should be considered to meet the criteria for full equivalence set out in the Directive. Captives and Special Purpose Insurers which are subject to different insurance requirements have been excluded from the

requirement to comply with the Directive. The Bermuda Solvency II Delegated Act shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the Parliament and the Council have both informed the Commission that they will not object. The period can be extended by three months at the initiative of the European Parliament or the Council.

Mr Speaker, Bermuda is in the financial services business and thousands of jobs, both Bermudian and guest workers alike, depend on the success of this sector. The Government, therefore is committed to helping Bermuda’s financial institutions succeed in global markets. This decision directly supports our commitment to the financial services sector and the livelihoods of those employed in it.

Mr Speaker, I wish to express my sincere thanks, firstly, to Mr. Jeremy Cox and the Bermuda Monetary Authority team for doing such an excellent job, with tireless effort, in orchestrating the regulatory equivalency exercise at home and abroad.

Secondly, I wish to thank the Association of Bermuda Insurers and Reinsurers for orchestrating a well-structured engagement strategy with the government of Bermuda, the government of the United Kingdom, the Bermuda Monetary Authority and various institutions in the EU and other places. Specifically, I wish to express my sincere thanks to Brad Kading and Leila Madeiros.

I also wish to express my sincere thanks to the Insurance Advisory Committee, the Bermuda Insurance Management Association, and the Bermuda International Long Term Reinsurers Association for their dedicated attention to these matters.

Lastly, I wish to thank, the Ministry of Finance team with responsibility for this area: Financial Secretary, Anthony Manders and Assistant Financial Secretary [Regulation], Pamela Burrows, the Office of the Attorney General, as well as EU Counsel to the Finance Ministry, Alastair Sutton, for coordinating and managing the government’s responsibilities at home and abroad in relation to this Directive.

Mr Speaker, meeting an imposed deadline is difficult, but reaching a goal that many thought to be impossible is a feat of determination, endurance and extraordinary discipline. Congratulations to the entire Bermuda team, you have truly performed a great service to Bermuda.

Thank you, Mr. Speaker.

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