A law allowing for group supervision of insurance companies from Bermuda has been approved by MPs.

Deputy Premier and Finance Minister Paula Cox told the House of Assembly on Friday that the legislation was needed to prepare Bermuda Monetary Authority (BMA) to meet international regulatory requirements.

"Of tremendous importance to Bermuda is the directive of the European Parliament and of the European Council on the taking up and pursuit of the business of insurance and reinsurance — Solvency II — and implications for our Bermuda reinsurers operating in the European Union," said Ms Cox.

She said the Insurance Amendment (No. 2) Act 2010 focused on the requirements of group supervision and established the powers and functions of the group supervisor under the Solvency II regime.

"This role of the group supervisor considers the qualitative requirements such as risk management, as well as supervisory activities for undertakings," she said.

Shadow Finance Minister Bob Richards said: "This is very important legislation because it directly affects our number one industry in Bermuda. I think that's fundamentally being recognised Island-wide — how important it is. We certainly support the legislation put before us today."

His UBP colleague Patricia Gordon-Pamplin, who works as an accountant for Everest Re, said: "This insurance is perhaps the peg leg of our economy at this time. It's the one thing that's holding us up."