Bermuda has been recommended for approval as a qualified jurisdiction by a working group of the US regulatory support organisation the National Association of Insurance Commissioners (NAIC).

If the recommendation is approved, it will reduce collateral requirements for Bermuda reinsurers who do business in the US.

The NAIC is the US standard-setting organisation created and governed by the country’s chief insurance regulators from the 50 US States, District of Columbia and five US territories.

Bermuda financial regulator the Bermuda Monetary Authority said in a statement this afternoon that the NAIC’s Qualified Jurisdiction Working Group released its Summary of Findings and Determination for public consultation today.

If approved by the full NAIC membership, Bermuda would be placed on the NAIC’s first List of Qualified Jurisdictions effective January 1, 2015

BMA CEO Jeremy Cox said this was a considerable achievement.

“The United States remains Bermuda’s largest trading partner,” Mr Cox said. “As such, being approved as a qualified jurisdiction is highly relevant for Bermuda in terms of potentially facilitating efficiencies in the cross-border operations of Bermuda reinsurers with the US insurance market.

“While we recognise the process is not yet complete, we look forward to receiving the NAIC’s final approval in the coming weeks.”

The Working Group’s recommendation went on to say that Bermuda’s status as a Qualified Jurisdiction is applicable to (re)insurers licensed as Class 3A, Class 3B and Class 4, and Long-Term insurers of Class C, Class D and Class E. It also recommended that the Authority be re-evaluated every five years after 1st January 2015.

“Approval under the Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions (the NAIC Process) means that Bermuda-domiciled reinsurers licensed in the above classes will be eligible to be certified for reduced reinsurance collateral requirements under the NAIC’s Credit for Reinsurance Model Law,” the BMA stated.

“Up to 240 Bermuda companies may stand to benefit from the NAIC decision, including some of the Island’s largest insurers and reinsurers, many of them represented by the Association of Bermuda Insurers and Reinsurers (ABIR).”

In August 2013, the Authority was the first insurance supervisor to agree to participate in an expedited review under the NAIC Process. In December 2013, Bermuda was granted conditional qualified jurisdiction status and the Authority continues to fully participate with the NAIC.

The NAIC Process was developed to evaluate the regulatory frameworks of non-US jurisdictions for reinsurance collateral reduction purposes.