BMA CEO: Bermuda faces a wait to confirm Solvency II equivalence
Bermuda will not see Solvency II equivalence until late 2013 at the earliest.That is what Bermuda Monetary Authority CEO Jeremy Cox told a packed audience at the Bermuda Insurance Institute’s (BII) spring luncheon yesterday, adding that the delay in Europe has pushed back Bermuda’s timeline.Mr Cox added that the late-2013 launch date for the European Union’s new regulatory regime for insurers is not “in the least surprising”.“Bermuda will probably have to wait a little longer to find out if it is going to be considered equivalent,” said Mr Cox. “Delays in implementing measures have pushed the likely date of this notification out to the end of 2013 at the earliest.”In March, European regulators said they were confident the new capital regime is still on schedule with a ‘soft launch’ planned for January 2013 with implementation by insurance companies happening later that year.In his speech to the BII crowd, Mr Cox gave an update on the BMA’s regulatory development and spent some time addressing the captive industry’s concerns about Bermuda’s quest for Solvency II equivalence.“I know there’s a lot of concern about Solvency II’s impact on our captive sector but we should all be feeling a lot more comfortable about this now in light of the recent undertaking by Karel Van Hulle, the European Commission’s head of unit for insurance and pensions,” he said, referring to Mr Van Hulle’s speech in December stating that ‘segmented equivalence’ would be permitted.Despite the industry’s concerns, the BMA reports that Bermuda had 862 active captives at the end of 2011, up from 845 a year earlier, representing an increase of 17 companies, or two percent.Mr Cox also said that while the BMA feels that Solvency II equivalence is something they will be vigorously pursuing, it is “not their final objective”.“It is one of a range of regulatory goals that we are committed to achieving,” he said. “There is no question that Europe and its buyers of risk transfer and risk management products are very important to us. But so, too, is North America and the many buyers of risk solutions and captive programmes that have long been a bread-and-butter staple of our market.”Calling them “limited purpose insurers”, Mr Cox told the audience that the BMA has also proposed a new consolidated statutory filing requirement.“We are asking Limited Purpose Insurers to submit a new risk return, or underwriting analysis, and an own risk assessment, which will demonstrate that each company understands the nature, scale and complexity of its business,” said Mr Cox.Mr Cox added that the BMA is looking to implement a new system replacing manual, hard-copy submissions with electronic filing. The BMA will be testing the system shortly.
The competitive advantage of Bermuda’s regulatory environment is its credibility.That is the view of the Bermuda Monetary Authority, which says it strives to protect and maintain the Island’s reputation by making sure the regulatory framework can withstand “critical inspection.”“If you ask me to sum up, in one word, what the benefits are from all the changes we are making to our regulatory framework, I would have to say: credibility,” said BMA CEO Jeremy Cox to an audience of insurance executives yesterday. “That’s essentially what you are paying for. Ultimately, credibility is what you get from the investment we are making in Bermuda’s regulatory infrastructure. That investment, in turn, flows directly into our global reputation and that is what enables us to do business.”Mr Cox added that the while the BMA is looking to regulate for the “long haul”, they are not seeking to be overly stringent.“Overly rigid regulation can effectively stifle competition,” he said. “Excessive caution is arguably as bad as inadequate supervision. Innovation and competition are critical in the risk industry. The regulator’s challenge is to strike the right balance: vigilant but not overly stringent and prescriptive.”
