BMA to consult on changes to IILT and IIGB regulatory regimes
The Bermuda Monetary Authority has issued a consultation paper that sets out its proposed regulatory regime for Class IILT insurers and several enhancements to the regulatory regime for Class IIGB insurers.
The BMA introduced the Class IIGB and Class IILT licence classes under the Insurance Act 1978 in 2019 and 2022, respectively.
The island’s financial services regulator proposes to formalise the regulatory framework (ie, annual return filing requirements) applicable to Class IILT insurers.
The regulator said: “The BMA has seen in the last few years a number of market developments, including the convergence of insurance, capital markets, artificial intelligence and distributed ledger technology [such as blockchain and web3 applications], both with and without the use of digital assets.
“While still nascent at this stage, the BMA foresees that the insurance sector will progressively adopt the token economy to improve liquidity and risk transfer efficiency. Additionally, the current insurance capacity for digital asset businesses remains limited.
“As more jurisdictions continue to implement regulatory frameworks for digital asset businesses, akin to Bermuda’s Digital Asset Business Act 2018 and the Digital Asset Issuance Act 2020, and as Bermuda’s digital asset business sector continues to mature, the demand for insurance indemnity coverage in the long-term sector is expected to grow.
“It is, therefore, important that the BMA continues to build upon its previous works to enhance the legislative and regulatory frameworks to allow these businesses to operate in a responsible manner.”
The BMA added: “The introduction of Class IILT is in response to the innovations seen by the authority in running its regulatory sandbox and innovation hub regimes since 2019.
“In May 2022, the BMA released a CP [consultation paper] proposing new classes of insurers, including an innovative class for long-term insurers [Class IILT] as a counterpart to the innovative class for general business insurers [Class IIGB].
“This new class aimed to provide a suitable category for companies emerging from the sandbox, especially those with business models that do not align with traditional classes.
“The proposal aligns with the BMA’s objective of safeguarding policyholders while fostering an environment conducive to innovation.”
The BMA invites the insurance industry and other interested persons to share their views on the proposals set out in the paper.
The deadline for comments is February 28.
• For the full consultation paper, see Related Media
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