Think globally, act locally
It is understandable why one might be tempted in Bermuda to be caught up entirely on local issues and focused on what meets us right in the face. Being an isolated oceanic island makes that approach to life more likely but we would be guilty of being ever so short-sighted in the literal sense!
The Bermuda insurance and reinsurance marketplace has evolved over the past two decades to become a leader in its own right and take centre stage as a dominant market force. Many of the insurance/reinsurance companies on Island are internationally active insurance groups generating income from more than 150 countries and wear the label ‘global company' with pride. Whilst they are Bermuda-based companies, they are actually writing global premiums that cover exposures and risks as far away as Asia, Australia, India, Africa, Indonesia, Brazil and Turkey to name a few.
The phrase “Think globally, act locally” or “Think global, act local” has been used in various contexts, including planning, environment, education, mathematics, and business. I'd like to think that this can be true of Bermuda's quest to be granted full equivalence with the European Solvency II Directive.
Meeting international insurance regulatory standards is critical if Bermuda is going to continue to be the home of major, commercial insurers and reinsurers, like the Association of Bermuda Insurers and Reinsurers (ABIR) members. The Bermuda Monetary Authority (BMA) has proposed an essential package of legislation and regulation that will need to be enacted in June. These new accounting, reporting and legal requirements are necessary in order for Bermuda's regulatory regime to be found equivalent to Europe's 2016 insurance regulatory requirements (Solvency II).
If Bermuda adopts these new provisions, we expect European officials will render a decision evaluating Bermuda for “equivalence” by the end of the year. If this happens this will culminate a successful eight year effort of the BMA and the government.
The successful efforts of Bermuda to meet international standards keeps Bermuda's leadership as an incubator for start-up insurers. It also allows Bermuda to be a credible group supervisor for established insurers such as ABIR's members. Over the long run this effort will continue to bear fruit for Bermuda's economy, it will create opportunities for future job creation.
Recently Bermuda was similarly found to be ‘equivalent' by the United States' National Association of Insurance Commissioners (NAIC) that designated Bermuda as a ‘qualified jurisdiction'. Being approved as a qualified jurisdiction is highly relevant for Bermuda in terms of potentially facilitating efficiencies in the cross-border operations of Bermuda reinsurers with the US insurance market.
The leadership of the BMA should be applauded in meeting these international standards as well as the leadership of Bermuda's government in working cooperatively with EU and US officials to continue to build Bermuda's reputation as a co-operative and transparent jurisdiction in which the rest of the world can be confident that tax laws will be enforced and that regulatory standards protect consumers.
By thinking about the benefits to Bermuda of becoming equivalent with international standards on the global landscape, we can act locally by supporting the ongoing work of the BMA and the government to ensure that the necessary legislation and regulation is adopted in June so that we have the best chance of being found equivalent by the end of the year. This action will strengthen our economy for the future.
Leila Madeiros is senior vice-president, deputy director and corporate secretary of the Association of Bermuda Insurers and Reinsurers.