IB bosses may have to spend more time here

Make text smaller Make text larger

  • BMA: The financial regulator is seeking comment on proposed new rules for insurers

    BMA: The financial regulator is seeking comment on proposed new rules for insurers

Tough new rules could mean international insurance bosses having to live in Bermuda or spend more time here, according to experts.

And big firms may also have to look at the residence of members of their boards — and make sure that decisions about Bermuda companies are made on-Island.

The proposed new rules, which appear in a consultation paper published last week by financial regulator the Bermuda Monetary Authority, would also mean a higher level of public disclosure, similar to the EU solvency and financial condition report.

The disclosure rules would mean Bermuda firms would have not only have to provide an economic balance sheet, — calculated in a way intended to represent the economics that an arm’s length transfer of assets or liabilities would entail — but also qualitative information about areas ranging from business performance to risk and capital management.

Andrew Smith, executive director of advisory processes at financial services firm EY, said that the BMA proposals were part of a bid to fall into line with new rules in the European Union on insurance.

The EU Solvency II directive is due to come into force in 2016 — and failure to meet the standards would mean Bermuda-based commercial insurers would be placed at a competitive disadvantage when doing business in Europe.

Mr Smith said that the changes meant not only strengthening the requirements, but also adding new rules to laws governing insurance in Bermuda, rather than as part of BMA regulations.

He added: “While it’s not a significant change in the Bermuda requirements for some, for these smaller insurers, the head office requirement is something they will need to think about more carefully.”

Mr Smith was speaking after the BMA released the consultation paper on the changes, designed to ensure Bermuda obtained full equivalency with EU Solvency II rules governing the insurance industry.

He said: “What it will do, what all of this is about, is making sure Bermuda gains the international recognition it needs for Europe to ensure it remains competitive in the international market as a jurisdiction of choice.”

He added: “We will see more people here or hopefully people redoubling their efforts to ensure when they are making decisions about a Bermuda company, they are doing that from Bermuda.

“It’s about companies being real Bermuda insurers or reinsurers.”

Mr Smith said that the proposed changes “strongly suggest” that the BMA wants to have all commercial insurance classes in line with the Solvency II rules.

He explained: “Bermuda’s current regulations have different requirements or implementation timelines for different classes of insurers.

“Under the BMA’s proposals, some smaller insurers and reinsurers may find regulatory harmonisation challenging and some long term life companies could find the revised timelines difficult to meet.”

But he added: “However, in the long run, increased international recognition should benefit this jurisdiction’s market as a whole.”

EY partner and Bermuda tax leader Bill Bailey said: “The head office requirements and outsourcing limitations will impact some smaller insurers and reinsurers, but many will not need to change.

“However, any insurers and reinsurers that replace professional outsourced providers by sharing staff across a wider international insurance group will need to be cognisant of unintended tax consequences.

“This is another reason why decisions relating to the Bermuda insurer and reinsurer should be made on Island.

“Bermuda could well see more insurance executives living or spending more time here because of this.”

Pete Cangany, EY senior partner and Bermuda insurance leader, said that many insurance companies already release information similar to the EU solvency and financial condition report — but they would have to “mitigate the risk of confusion in the market when they release it in a new and different format”.

He added: “They will also have to make sure their quality control processes are very robust around any information they are disclosing to the public for the first time under these new regulations.”

You must be registered or signed-in to post comment or to vote.

Published Apr 7, 2015 at 4:48 pm (Updated Apr 7, 2015 at 4:48 pm)

IB bosses may have to spend more time here

What you
Need to
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "Who is the greatest basketball player of all time?"
    • Kareem Abdul-Jabbar
    • 4%
    • Larry Bird
    • 49%
    • Wilt Chamberlain
    • 2%
    • LeBron James
    • 6%
    • Earvin 'Magic' Johnson
    • 4%
    • Michael Jordan
    • 33%
    • Bill Russell
    • 2%
    • Total Votes: 6080
    • Poll Archive

    Today's Obituaries