Significant progress has been made in enhancing the framework for Bermuda's insurance industry and ensuring regulatory equivalence with its key trading partners, but there is still considerable work to be done.

That is the view of Matthew Elderfield, CEO of the Bermuda Monetary Authority (BMA), which has launched three documents designed to improve the Island's regulatory framework for insurers.

The documents include a report entitled 'Bermuda's Insurance Solvency Framework - The Roadmap to Mutual Recognition', a discussion paper on groups supervision and a consultation paper on guidance for Special Purpose Insurers (SPI).

Mr. Elderfield said: "The series of documents published yesterday show that Bermuda is continuing to develop a leading international regulatory framework for insurance.

"Coming shortly after EU (European Union) agreement on the Solvency II directive, our initiatives demonstrate that the Bermuda regulatory framework is keeping pace with international developments and that Bermuda is on-track for regulatory equivalence with Europe. This means Bermuda-based firms are in a position to operate globally without regulatory barriers, due to the high standards that are being put in place."

The Authority has been working towards achieving mutual recognition for Bermuda's regulatory framework in major international markets, with an emphasis on insurance regulation, with 'Bermuda's Insurance Solvency Framework' detailing its plan for this goal.

"We have already made significant progress towards the goal of enhancing our regime and ensuring regulatory equivalence with our key trading partners, however considerable work remains to be done," said Mr. Elderfield.

"Our roadmap provides details of the initiatives the Authority will undertake over the next couple of years to complete our work."

The Authority has also proposed to implement group-wide supervision for insurance groups operating within Bermuda, with the discussion paper called 'Implementing Group-wide Supervision' highlighting the main issues the BMA was considering for inclusion, such as determining the lead supervisor for a group, the calculation of group solvency, the treatment of intra-group transactions, eligible capital, reporting requirements, group corporate governance and risk management. The scope of group-wide supervision would apply to Class 4 and Class 3B re/insurers.

"Our discussion paper provides the Authority's contribution to the growing debate on group supervision," Mr. Elderfield said. "Recent market events have highlighted the importance of assessing risk at a group level.

"The Authority already has a programme of supervisory colleges in place and is now setting out its proposals to require Bermuda's large commercial insurance firms to be subject to group supervision."

The consultation paper on guidance for SPIs has set out the minimum prudential requirements for the new SPI class that was introduced in legislation in 2008.

"The Authority recognises the importance of ensuring that the regulatory framework in Bermuda allows market innovation by being sufficiently flexible and responsive to new developments, subject to appropriate minimum prudential standards," said Mr. Elderfield.

"The SPI guidance sets out our thinking for the ground rules for market participants planning to use side cars, cat bonds and other special purpose vehicles."