The pace of insurance company registration in Bermuda has picked up, bolstered
in the main by a rise in special purpose insurers.
The latest figures released by the Bermuda Monetary Authority (BMA) show that
31 insurance companies have been registered in Bermuda so far this year. This
represents a 30% increase for the seven-month period to July 31, 2011, and is an improvement
on the 36 registered in the entirety of 2010.
While Jeremy Cox, CEO of the BMA, said the increased pace of registrations
for this year was very encouraging, one specific area saw a marked upward trend
in registrations. Cox explained that: “The area where we are seeing the largest
single increase is in the Special Purpose Insurers (SPI) class. We have already
seen 12 new SPIs registered this year. This compares to eight SPI registrations
for the whole of 2010.”
The majority of the new SPIs - insurance entities
that conduct special purpose business for a specific period of time - were formed
in relation to the record-setting level of global catastrophes experienced during
the first half of 2011, Shelby Weldon, the BMA’s Director of Insurance,
Licensing and Authorisation, said.
According to Cox, altering the country's regulatory framework to accommodate
SPIs in 2009 has resulted in the translation of market interest in these vehicles
to a larger number of registrations being made. Cox added, that: "For example,
it was exciting to see earlier this month the board of the California Earthquake
Authority (CEA), that state’s quasi-governmental residential earthquake
insurer, approve a USD150m catastrophe bond issue via a Bermuda SPI, Embarcadero
Re. The choice of a Bermudian reinsurer for this latest CEA cat bond issue
was a departure from previous normal practice for them, and a positive indication
that markets seeking quality supervision remain confident in Bermuda."
Cox also noted the recent report by the European Insurance and Occupational
Pensions Authority (EIOPA), which indicates that Bermuda’s regime for
commercial insurers meets the criteria for Solvency II equivalence, although with some
issues outstanding. Cox called this a "positive endorsement of the BMA's
commitment to effective, quality risk-based supervision", stressing that
Solvency II equivalence is "a great step in the right direction for Bermuda".
He stressed that "our work continues on ensuring the framework enhancements
we are putting in place build upon the effectiveness of Bermuda’s regulations
and also remain consistent with international standards".
Weldon added that insurance registrations to date are also reflecting new business
in both the captive and commercial insurance sectors of the Bermuda market. “Compared to 2010, Bermuda has also seen a rise in the level
of Class 3 and Class 3A insurers being registered here. Five of each have already
been registered up to July 2011. This compares to the four Class 3s and two Class 3As that were newly registered in total last year.”
LAWANDTAX-NEWS.COM
