The Bermuda Monetary Authority has proposed a framework for dealing with insurers that can no longer remain in business, with the aim of protecting policyholders and limiting disruption to the island’s economy.

Under proposals laid out in a consultation paper, the BMA would become the authority responsible for managing the failure of insurers covered by the proposed regime.

Those would include domestic insurers, as well as international insurance groups for which the BMA is the group supervisor.

The regulator could also bring other Bermuda commercial insurers within the regime if their failure was judged likely to threaten financial stability or cause significant harm to the local economy.

The proposal is an early step. It sets out who would oversee the process, what that authority would seek to achieve and which insurers would fall within its scope.

The powers available to deal with a failure, and how they would work in practice, will be considered in later consultations.

The process known as “resolution” is the orderly restructuring or winding down of a failing insurance company by regulatory authorities.

The BMA said the objectives of its proposed regime would include protecting policyholders, preserving Bermuda’s financial stability, safeguarding client assets and minimising the use of public money. Protecting policyholders could mean maintaining cover, continuing claims payments, preserving policy values or arranging an orderly transfer of business.

The regulator does not propose a fixed order of priority for those objectives. Instead, it would weigh them according to the circumstances of each case. Resolution could be considered where it was likely to achieve a better outcome than ordinary insolvency proceedings.

The scope of the proposed regulation is designed to apply regulatory focus to the areas of greatest risk to Bermuda’s financial stability and the local economy.

The BMA says domestic insurers “play a vital role in Bermuda’s domestic economy by providing essential coverage to individuals and businesses. The failure of a domestic insurer could jeopardise critical services, disrupt claims payments, and erode public confidence in the local insurance market.”

The paper adds that large international insurers “operate complex and interconnected businesses with material exposures across jurisdictions and sectors, playing a critical role in global insurance markets.

“Their failure could lead to severe disruptions within Bermuda and/or the global insurance sector, with potential far-reaching and long-term adverse implications for the financial system and the real economy.”

Not every insurer covered by the regime would necessarily have to prepare an individual resolution plan. The BMA proposes to assess factors including an insurer’s size, complexity, cross-border operations and importance to the local economy before deciding whether one is needed.

Such a plan would set out practical steps for dealing with an insurer’s failure. Any company selected for one would be formally notified of the reasons and what would be expected of it.

The BMA already has powers to monitor and intervene in troubled insurers, as well as access to Bermuda’s court-supervised provisional liquidation process. It also requires recovery planning under rules introduced in 2024.

The consultation proposes building on those arrangements, with additional requirements introduced in stages.

Housing the resolution function within the BMA would avoid the cost of establishing a separate authority, the paper says. The regulator proposes separate staff, reporting lines and decision-making arrangements to guard against conflicts with its existing supervisory role.

• The BMA welcomes views from stakeholders, with written comments to be sent to policy@bma.bm no later than close of business on December 15, 2026

• See the consultation paper attached under Related Media

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BMA Consultation Paper on Proposed Resolution Regime