The Bermuda Monetary Authority has released details of its proposed group-wide supervision framework for Bermuda's insurance sector in a consultation paper entitled "Insurance Groups Regulatory Framework".

Draft legislation to facilitate implementation of the group-wide supervision regime for Bermuda (re)insurers will also be issued shortly.

And BMA CEO Jeremy Cox said the Authority was looking to increase resources - in particular high-level expertise - to deal with the challenge of goup supervision.

There are a significant number of Bermuda re/insurers currently operating within a group structure. The Authority began its consultation process on group supervision for Bermuda's largest commercial insurers last year with the distribution of a discussion paper to the market. The feedback received from this, as well as international standards in development, provided useful input for the proposals published in the Consultation Paper.

BMA CEO Jeremy Cox said: "The Authority is looking to develop a group-wide supervisory regime that addresses the needs of the Bermuda jurisdiction, while at the same time being compliant with evolving international standards.

"Our goal is to achieve broad equivalence with international standards, including under Solvency II. This means we will not simply duplicate international standards, but will instead seek to adapt them intelligently in line with the nature of the Bermuda market."

Mr. Cox said enhancements to the insurnace regulation regime were planned as part of the effort to achieve regulatory equivalence under Europe's Solvency II Directive.

The group supervision consultation paper was coming out more than a month earlier than planned, he added.

The consultation paper describes the scope of the Authority's group-wide supervision regime and outlines the conditions under which the regulator would seek to be considered a Group-wide Supervisor.

It also describes other features of the framework including: the assessment of group corporate governance and risk management; group-wide solvency assessments, which includes a discussion of the treatment of intra-group transactions and risk concentrations; and the Authority's statutory reporting requirements for groups.

In addition, the paper explores the efficacy of group support as an important factor in determining group-wide solvency, and the treatment of unregulated entities that are part of the group. Since any group-wide supervisory regime hinges on the principle of supervisory cooperation and equivalence among regulators, the paper also seeks to explain the BMA's own proposed equivalence framework.

"In order for us to conduct group assessments for supervisory purposes, effectively be a group-wide supervisor, and participate in additional supervisory colleges, we will need to have appropriate resources," Mr. Cox said.

"With that in mind, we will be heavily focused on building on the existing senior-level expertise and skills in our supervisory and policy teams during this year, which will be dedicated to us implementing group supervision."

He also acknowledged the work of the team that developed the group supervision framework, and the cooperation of Bermuda's insurance market.

He paid tribute to the efforts of project leader Craig Swan, his deputy on this initiative Yvette Pierre and senior analyst Kevin Anderson.

Consistent with the Authority's risk-based approach to regulation, the scope of its group-wide supervision regime will initially apply to the jurisdiction's Class 4 and Class 3B re/insurers, the largest firms with the highest risk profiles. However it will be expanded in the future in line with changes in the international regulatory environment.