Bermuda insurance regulator Jeremy Cox is thinking a step ahead.

He hasn?t yet seen legislators put ink to paper to make law plans to increase the regulatory checks his division makes on Bermuda-based insurers, but he is already plotting the next regulatory change.

Simultaneous to stepping up the frequency of regulatory checks, Mr. Cox, Supervisor of Insurance at the Bermuda Monetary Authority since 2002, wants to move towards a ?risk-based approach? to regulation, in keeping with the increasing number of countries moving to migrate to this more tailored regulatory approach.

In basic terms, a risk-based model measures the risk inherent in the insurer as a means of establishing how much capital it needs to support it.

?We are trying to find the appropriate model that can be calibrated to the Bermuda market,? Mr. Cox said, in an interview earlier this year.

He expects the new system to be in place in time for the Island?s class four companies to have to comply with the new system when they make their 2007 annual filings in the first half of 2008.

While a proponent of regulation that is appropriate to a growing sector?s needs, Mr. Cox also says measured steps are needed in making changes, based on a wariness to tie up companies in more red tape than is necessary.

For example, Mr. Cox doesn?t always feel it is necessary to apply all of the standard insurance regulatory principals to captive insurance companies, which account for about 1,000 of the Island?s 1,200 insurance and reinsurance companies, because these entities generally insure the risk of their owners, meaning they can carry less risk of destabilising financial markets if hit by losses.

Keeping on top of regulation for the diverse needs of Bermuda?s growing insurance market means greater workloads for Mr. Cox and his staff. To keep up, the insurance division has been boosting numbers. It has already ramped up from 30 to 50, and expects to have 65 employees by around the time it makes its move to the BMA?s new headquarters in early 2007.

The BMA?s new Victoria Street office, bought last year and to undergo a name change once old tenants relocate to new spaces in the coming months, is to be outfitted with office spaces for 65. ?The move is critical for us, and we need to get there in order to have that number,? Mr. Cox said.

Higher numbers also spell greater costs. Mr. Cox said some of the financial burden has had to be passed on to the insurance sector in the way of higher supervisory fees, but there hasn?t been any grumbling from bosses.

Bermuda?s insurers and reinsurers have largely been supportive of the Island?s move to more stringent regulation because it helps to further cement Bermuda?s reputation as a mature and leading market.

?All want to make sure the insurance regulator is adequately resourced,? he said.

Twenty-two of the Island?s largest companies have even put their own resources behind their own regulatory initiative, forming a body ? the Association of Bermuda Insurance and Reinsurance Companies ? with the primary mandate of working with both Bermuda and overseas regulators.

For his part, Mr. Cox has long worked to foster relationships with his peers in other domiciles that host Bermuda-based insurers and reinsurers, including the possibility of eventually reaching mutual recognition agreements with ?sister? regulators.

Under such an agreement, insurers that operate in multiple jurisdictions would be considered acceptably regulated by the ?home? regulator (the BMA, in Bermuda?s case), and not necessarily subject to additional regulation in each domicile it sells policies in.

In keeping with his oversight of a market that continues to gain prominence ? Bermuda is now considered the third most major reinsurance market, according to a report last year from Standard & Poor?s ? Mr. Cox feels he needs to keep on top of regulatory happenings in other domiciles, monitoring how changes will impact Bermuda-based insurers.

A reinsurance directive now being put in place on insurers and reinsurers operating in the European Union is one example, and one that Mr. Cox is watching closely, as it signals another step in a movement to an international standard.

?I have no problem with international standards, and a move to mutual recognition,? Mr. Cox said, but he?ll make sure it suits the needs of the Bermuda insurance market before signing up. ?I do believe there are some basic fundamentals? that can be applied across jurisdictions.

However, ?to remove the ability of a jurisdiction to act in a manner it sees fit would be foolhardy,? he added.