Bill To Create Insurance Regulatory Sandbox
The Insurance Amendment Act 2018 will be tabled in the House today [June 22] Premier David Burt said, explaining that the aim is to create an “Insurance Regulatory Sandbox which will further position Bermuda to maintain its status as a leading centre for insurance innovation.”
“Technology-enabled innovations in the insurance industry or ‘InsurTechs’ have emerged to offer simpler products and streamlined customer experiences,” the Premier said.
“The challenge for many insurance companies is to determine the best way to embrace the financial technology imperative given their strategic vision and business objectives.
“In an effort to overcome these hurdles, the Bermuda Monetary Authority proposes to establish an Insurance Regulatory Sandbox to enable testing of financial technology by a licensed insurer and/or a licensed insurance intermediary to a limited number of clients in a live environment for a limited time period.
“This Bill will assist Bermuda in advancing its FinTech ambitions, ensuring that we remain a centre of insurance innovation, by providing the opportunity for new and existing companies to create and perfect innovative InsurTech products here in Bermuda,” the Premier added.
The Premier’s full statement follows below:
Mr. Speaker, I am pleased to be tabling later today the Insurance Amendment Act 2018. The purpose of the Bill is to create an Insurance Regulatory Sandbox which will further position Bermuda to maintain its status as a leading centre for insurance innovation.
Mr. Speaker, Technology-enabled innovations in the insurance industry or “InsurTechs” have emerged to offer simpler products and streamlined customer experiences. The challenge for many insurance companies is to determine the best way to embrace the financial technology imperative given their strategic vision and business objectives.
Mr. Speaker, although a total of $724 million was invested in InsurTech in the first quarter of 2018, according to Willis Towers Watson and CB Insights’ latest Quarterly InsurTech Briefing, one of the largest hurdles facing the global insurance sector is the challenge of bringing developments to market amid an insurance regulatory landscape that does not always provide the flexibility necessary to accommodate new concepts at the same speed as the technology develops.
Mr. Speaker, in an effort to overcome these hurdles, the Bermuda Monetary Authority [“the Authority”] proposes to establish an Insurance Regulatory Sandbox [“the Sandbox”] to enable testing of financial technology by a licensed insurer and/or a licensed insurance intermediary to a limited number of clients in a live environment for a limited time period. The proposed Sandbox eligibility criteria will be as follows:
- technology must be new or use existing technology in a different way;
- research must be conducted in advance of the application;
- testing objectives must be clearly defined;
- an insurer or an insurance intermediary must demonstrate its understanding and assessment of the relevant risk;
- an insurer and/or an insurance intermediary must demonstrate that policyholders and counterparties are adequately protected against loss during the testing stage;
- an insurer and/or an insurance intermediary will be required to have a well-defined exit or transition strategy in case the testing is unsuccessful or discontinued; and
- an insurer and or an insurance intermediary must demonstrate that it has the intention, ability, and resources to deploy the relevant product, service or distribution channel upon successful testing and exit from the Sandbox.
Mr Speaker, the Insurance Amendment Act 2018 will allow the Bermuda Monetary Authority to implement a prudential regulatory regime in relation to InsurTech business by making a number of changes to the Insurance Act 1978 to introduce a new class of innovative insurers and innovative managers, brokers and agents [intermediaries].
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 the choice of domicile. The expansion of the insurance sector supports the Government’s mandate to expand the economy, to create jobs for Bermudians, and to increase revenue through the continued promotion and development of Bermuda as a first tier international financial centre.
Mr. Speaker, this Bill will assist Bermuda in advancing its FinTech ambitions, ensuring that we remain a centre of insurance innovation, by providing the opportunity for new and existing companies to create and perfect innovative InsurTech products here in Bermuda.
Thank you, Mr Speaker.
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