Bermuda currently has more advanced insurance regulation than the US or the European Union (EU), an industry conference heard on Friday.

Bradley Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), said at the Standard & Poor's / PricewaterhouseCoopers Bermuda (Re) insurance Conference that the Island was on track to achieve regulatory equivalence with Solvency II — updated rules for insurers due to be introduced in the EU in 2012.

Jeremy Cox, deputy CEO of financial regulator the Bermuda Monetary Authority (BMA), said the future regulation would require more cross-border co-operation and that trust between regulators would be key.

Mr. Kading told a large audience at the Fairmont Hamilton Princess hotel that the BMA was about two-thirds of the way through a programme designed to lead to regulatory equivalence.

"Bermuda has an experienced and quality regulatory team and a system that is in advance of where the US system is," Mr. Kading said, adding that it was also "way ahead" of the EU's Solvency I rules.

"We have a tough, risk-based capital formula in place that's in advance of our leading trading partners and the BMA has demonstrated market leadership."

He cited the case of New York-based insurance giant American International Group (AIG), saved from collapse by a US Government bailout worth more than $180 billion, as "an example of the failure of financial supervision" which US regulators could not explain away.

Group supervision and mandated co-operation between regulators in different jurisdictions would help to stop such a case being allowed to happen again, he said.

Mr. Cox, who will succeed Matthew Elderfield as the BMA's CEO at the end of the year, said the regulator was meeting its goals on its road map to regulatory equivalence with both the EU and the US — something that was essential to ensuring that Bermuda insurers were not discriminated against in those markets.

It was not just the regulatory framework, but the effective implementation of it, that was essential to achieving regulatory equivalence and ensuring that the Island's insurers don't start looking to relocate.

"The interest in moving to other domiciles will be decided by how effective firms and other regulators see Bermuda as overseeing its regulatory responsibilities," Mr. Cox said.

He added that the BMA had influence at the global level through its seat on the executive committee of the International Association of Insurance Supervisors (IAIS).

International insurance regulatory discussions were currently "like a battle between the US and the EU", Mr. Cox said, adding that Bermuda had to achieve a good working relationship with both.

"Bermuda has a unique opportunity to foster this cooperation and coordination between regulators," Mr. Cox said. "We can be used as an example of how things should work."

Mr. Kading said Bermuda's small size had helped it to facilitate effective and efficient insurance regulation, as opposed to the US, where each of the 50 states has its own regulator and rules, and the EU, where the 27 member states grapple with language and cultural differences.

Speaking from a company viewpoint, RenRe chief compliance officer Stephen Weinstein said: "We have every faith that Bermuda will achieve mutual recognition.

"We deserve to have market access and we're going to get market access."

He added that, in his view, the BMA was "the most innovative and effective reinsurance regulator in the world", and that major markets overseas needed access to Bermuda companies' capacity and risk management skills.