The local insurance industry is generally supportive of the Bermuda Monetary Authority’s plans to enhance the regulatory and supervisory regime for commercial insurers and insurance groups.

This, from Christine Patton, executive director of the Bermuda International Long Term Insurers and Reinsurers, speaking at the Bermuda Captive Conference.

A regulatory consultation paper published by the BMA in July would make the Bermuda regime more closely resemble the Solvency II framework for insurance and reinsurance undertakings in the European Union.

Among other things, the changes would include amendments to the computation and flexibility of the Bermuda solvency capital requirement, and changes to the calculation of the technical provisions of insurers and insurance groups.

Speaking during a panel called Bermuda – A Catalyst for Innovation and Change in Life (Re)Insurance, Ms Patton said there was so much “different stuff” happening here in terms of new products being written, that she welcomed the BMA’s attempt to put up “guardrails”.

She pointed to pension risk transfer as an example.

“That is relatively new to Bermuda,” Ms Patton said. “This is the transfer of the risk of a pension liability from companies, like Coca Cola or Apple, that they are holding on their balance sheet to a reinsurer in Bermuda.

“That business is growing, and it is coming from the United States, the United Kingdom and Canada.”

Ms Patton said: “Don't get me wrong. We are going back and forth with the BMA. We have not come to a complete landing on it. In fact, our final response on consultation paper two is due on Friday (September 15), so we’re in the middle of regulatory change.

“You might ask, have we lost any entities to this process? Have any companies left because of it? We have lost two entities in the last 12 months, and we have gained 11.

“The net/net is that we’re losing companies that perhaps may not have been as fully capitalised as they should have been. We’re OK with that.”

The panel was moderated by Rachel Derry, executive vice-president of Liberty Mutual Management, and also included James Claxton, partner at EY, and Jonathan Young chief executive officer of Boston Re.

Ms Patton said the Bermuda insurance industry “straddles a universe of different regulatory regimes and frameworks”.

“We look eastward to Europe and we have EIOPA (the European Insurance and Occupational Pensions Authority) and westward to the NAIC (The National Association of Insurance Commissioners),” she said. “All US states have a different approach to some of the risk coming out of the United States and into Bermuda.”

She said Bermuda must “demystify” the workings of local insurance.

“There has been a lot of mystery around the industry,” Ms Patton said. “Explaining ourselves and how we operate is where our mandate is right now.”

Elaborating on other challenges facing Bermuda insurers, EY partner James Claxton said talent is an issue.

“We have a lot of talent here which is great,” Mr Claxton said, “but we also have a lot of companies who are trying to get that talent.”

The problem is compounded by record low unemployment rates in the United States and all-time high wages, which make moving to Bermuda to work less attractive.

“Wages have increased dramatically since Covid-19,” Mr Claxton said. “It is becoming increasingly difficult to find people to fill roles. We’re trying to grow the local talent in Bermuda, but that can only happen at a certain pace.”

Talking on the future of the industry, Boston Re CEO Mr Young said talent is going to have to develop in a way that it has not had to, in the past.

“People are going to have to be more Swiss Army knives than narrow experts,” he said. “If you’re an actuary, you are also going to have to understand complex derivatives. If you’re an accountant, you're also going to need a deep understanding of the regulatory framework and how that impacts your job.”

He said people will also need to understand artificial intelligence and how it can help them in their jobs.