The European Insurance and Occupational Pensions Authority (EIOPA) has endorsed key aspects of Bermuda’s commercial reinsurance regulatory regime as meeting the criteria of the Solvency II directive, with certain caveats.
Bermuda Monetary Authority (BMA) has called this a “big step” towards ensuring Bermuda insurers and reinsurers retain access to EU markets when new harmonisation rules come into effect in 2016.
“This milestone is a major development for Bermuda and its well-deserved reputation as the world's risk capital,” said Jeremy Cox, CEO of the BMA.
“This designation ensures that Bermuda’s commercial insurers may continue to transact business within the EU. Moreover, equivalence is of benefit to the EU and its citizens, as it enhances the provision of well-regulated, stable insurance capacity.”
“Equivalence also substantively strengthens the level of cooperation and trust between international insurance supervisors, as well as the cross-border efficiencies and effectiveness of supervision between jurisdictions.”
Bermuda is one of only two non-EU countries to have so far sought equivalence under all three articles in the Solvency II Directive: Article 172, which relates to Bermudian (re)insurance contracts being treated the same as European Economic Area (EEA) insurance contracts; Article 227, which relates to group solvency requirements for Bermuda (re)insurers with an EEA parent; and Article 260, which relates to group supervision of EEA insurers with parents outside of the EEA.
EIOPA’s recommendation only addresses Bermuda’s commercial (re)insurers: ie, Bermuda’s insurance groups; Class 3A, 3B and 4 insurers; and long-lerm (life) classes C, D and E.
Prior to EIOPA’s announcement, Bermuda has also been recommended for approval as a qualified jurisdiction by a working group of the National Association of Insurance Commissioners.
