Cox: 'Bermuda faces a choice: to reach out and seize the benefits of international engagement or retreat into isolationism'
Bermuda must rise to the international challenges of the insurance industry or hardworking Bermudians will face the consequences, Premier and Finance Minister Paula Cox warned.Rival jurisdictions are now competing with the Island for businesses, capital and jobs right here in Bermuda, the Premier told the House of Assembly.She was speaking during the debate on the Insurance Amendment Act, which makes tweaks to the way the Island’s insurance sector is supervised following an assessment by a European authority.Ms Cox stressed the importance of complying with the European Union’s Solvency II Directive, which aims to harmonise insurance regulations across Europe.“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 choice of domicile,” said Ms Cox.“Without question, the competitive environment facing our workers and businesses is challenging. Many competitors have followed our lead in reforming their economies.“Now they are competing with us for businesses, capital, and jobs. Not only around the world but right here in our Country.“Bermuda faces a choice: to reach out and seize the benefits of international engagement or retreat into isolationism.“This choice is central to the competitiveness of the Bermudian economy and the hopes of hardworking Bermudians.”However, she remained upbeat about the Island’s position, telling MPs: “While some of our competitors demonstrate much strength, Bermuda has a compelling and timely story to tell.“On insurance supervision, the goal is to maintain a pragmatic regulatory framework that works for Bermuda which can also be regarded as equivalent to other jurisdictions.“Every aspect of our financial services policy objectives is designed to emphasise that a competitive, efficient, and stable financial centre operating with integrity is in Bermuda’s best interests.“International companies have long invested in the Bermuda marketplace because our markets are safe and profitable, while the regulatory environment is prudent, but fair and flexible.”Ms Cox said the European Insurance Occupational Pension Authority had carried out a review of Bermuda’s regulatory regime and concluded it was already mostly in line with the Solvency II Directive.However, a number of amendments to the Insurance Act were still necessary. These were passed on Friday night, including:n clarifying the nature of insurance groups in Bermuda;n clarifying Bermuda Monetary Authority’s powers to grant exemptions from certain standards;n expanding the nature and scope of a principal representative’s reporting powers;n making provision for a ‘safe harbour’ from certain penalties to be extended to certain new classes of insurers which is already provided to existing classes of insurers.Ms Cox told the House: “Bermuda Monetary Authority has achieved significant progress with its insurance regulation enhancements.“Compliance with the EU Solvency II Directive is a key priority for the Authority as well as the commercial insurance sector. Compliance with Solvency II would permit Bermuda based insurers to operate in the European market without additional regulatory hurdles. In order for Bermuda to succeed, the insurance regime must be brought into compliance with the Solvency II Directive.”The One Bermuda Alliance gave its support to the amendments, but Paget West MP Patricia Gordon-Pamplin warned of potential knock-on effects because of a conundrum between Europe and the UK.Shadow Finance Minister Bob Richards noted companies currently in Bermuda that don’t want to abide by the new regulations could end up getting poached by the Cayman Islands.Progressive Labour Party backbencher Terry Lister countered Mr Richards’ fears, saying: “I think we should be continuing to look at the whole market and see where all the opportunities are.“We shouldn’t have a special shield to protect against what the Cayman Islands are doing. If our framework is solid, we will be OK. We don’t have to worry about one particular place.“We have had the benefit for many years of having a strongly regulated industry. Bermuda has a reputation of getting things right.”