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  • Bermuda Solvency 2 Equivalence Takes Effect; Retroactive to Jan. 1

    Press Releases | 03.29.2016

    ABIR Press Release
    For Immediate Release
    Contact: Brad Kading | Bradley.Kading@abir.bm | @abir_bermuda

    Bermuda Solvency 2 Equivalence Takes Effect; Retroactive to Jan. 1

    Hamilton, Bermuda (March 28, 2016) – “Bermuda’s robust regulation regime for commercial insurers has now been found ‘equivalent’ by the world’s largest market – the EU has given Bermuda its stamp of approval,” said Bradley L. Kading, President and Executive Director of the Association of Bermuda Insurers and Reinsurers (ABIR). “This will benefit ABIR members in Bermuda – the red tape has been effectively removed,” Kading noted. “For example, the Bermuda Monetary Authority (BMA) is now recognized as a global group supervisor for targeted insurance groups and reinsurance can be conducted on a cross-border basis without market barriers. For Bermuda insurers this means an efficient rather than redundant layer of group supervision; and for reinsurers it means cross-border trade without individual jurisdictional restrictions,” noted Kading.

    The final multiple stage approval was completed with publication in an EU journal on March 4 that began a formal 20-day notice period. On March 25, the BMA’s equivalency under the three measures of Solvency 2 (group capital, group supervision and reinsurance regulation) became effective retroactive to Jan. 1. “Congratulations to BMA CEO Jeremy Cox and Managing Director of Supervision Craig Swan for their leadership in completing the Solvency 2 equivalence project,” Kading said. Bermuda and Switzerland are the only two jurisdictions which have been found fully equivalent by the EU. “The US National Association of Insurance Commissioners (NAIC) has also designated Bermuda and the BMA a “qualified jurisdiction” which also allows robust cross-border reinsurance trade with the US – the world’s second largest trading block,” Kading noted. “This bilateral recognition by the world’s two largest trading blocks ensures Bermuda’s status as one of the three leading reinsurance domiciles in the world,” Kading said, “and it positions Bermuda well for continued recognition by the International Association of Insurance Supervisors (IAIS) which is currently substantially rewriting its own multilateral international regulatory standards.”

    “Bermuda’s reinsurers supply approximately 40% of US and UK property catastrophe reinsurance and about 20% of EU property related reinsurance, according to various broker, statistical or academic reports,” Kading noted. “ABIR’s members and other Bermuda insurers have paid more than $35 billion in catastrophe claim payments to their US clients in the last 15 years. In Asia and Oceana we’ve reported 20% of the loss estimates for 2015’s Chinese Tianjin fire and explosion; 29% of the privately reinsured share of the 2011 Japanese earthquake and tsunami; 51% of the reported liabilities for New Zealand’s 2010 and 2011 earthquakes,” Kading noted. “As Asia’s insurance market develops more and more global insurance capacity will be needed and Bermuda’s reinsurers are well placed to help meet that need,” Kading continued.

    “The coverage provided by Bermuda’s commercial insurers and reinsurers makes insurance markets more competitive because more capacity can be offered to clients and consumers have greater choice of companies. Cross-border trade of reinsurance is essential for the smooth functioning of insurance markets at a time when more and more reinsurance is needed to close the Protection Gap on uninsured catastrophe losses in both the developed and developing world,” Kading said.

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    About ABIR: The Association of Bermuda Insurers and Reinsurers (ABIR) represents Bermuda’s major property and casualty insurers and reinsurers. Bermuda is the center of global expertise on underwriting for catastrophe risk transfer products and other specialty insurance and reinsurance. For more information, please visit: www.abir.bm.