Bermuda has moved “ahead of the rest” by showing international leadership in the field of global insurance regulation.That is the view of Karel Van Hulle, the architect of the European Union’s Solvency II enhanced regulatory regime for insurers, who said at a conference in Hamilton yesterday that the Island now found itself in “a privileged position”.Financial regulator the Bermuda Monetary Authority (BMA) has been enhancing its insurance regime in the pursuit of “third-country equivalence” with Solvency II to be ready for the originally scheduled implementation date of January 2014, in order that Bermuda-based re/insurers would not be competitively disadvantaged when doing business in the EU.Even though that date has now been put back by at least a year, the progress Bermuda has made in preparing for it will stand it in good stead, Mr Van Hulle said during a panel discussion at the BMA Regulatory Forum at the Fairmont Hamilton Princess.“One should not underestimate that a country as small as Bermuda showed leadership in taking the decision to transform its regulatory regime into something that today is a little bit like the international standard,” Mr Van Hulle said.“It’s a risk-based solvency regime which is there in the interests of the industry — and that’s important.“The fact that Bermuda showed leadership — together with Switzerland and Japan — the obvious advantage of that is that you are in a privileged position.”What was important now, he added, was that Bermuda continued on the same route and that the BMA should conclude a Memorandum of Understanding with the European Insurance and Occupational Pensions Authority (EIOPA), and work together on establishing group supervision of international companies.“You’re ahead of all the rest,” Mr Van Hulle, who is sometimes referred to as ‘Mr Solvency II’, said. “The rest still has to think about how to go about it, and how to get themselves organised.”Bermuda has lobbied the EU to try and secure equivalency without having to impose Solvency II standards on its captive insurance sector, particularly those companies who predominantly insure the risks of their corporation owners and therefore have a lower risk profile than commercial insurers who write third-party business.Mr Van Hulle said that Bermuda’s regime which divides different types of insurer into distinct classes “is inviting us, when we make the equivalence decision, to identify those classes that we consider to be subject to equivalence”.He said a bifurcated, or segmented, approach to equivalency was “perfectly possible”. He added that an EIOPA report on the Bermuda market, which also suggested that captives could be exempt from the enhanced regime, should be updated to take account of the progress made by the BMA.He explained the Solvency II delay by saying that technical issues were being considered by politicians, and therefore had become political issues, which were more difficult to resolve. There is only one major outstanding issue, he said, and that relates to long-term guarantees by life insurers.Fellow panellist Constantine Iordanou, chairman of the Association of Bermuda Insurers and Reinsurers (ABIR) and CEO of Bermuda re/insurer Arch Capital, was asked whether Bermuda’s companies could be put at a competitive disadvantage by being ready for Solvency II when Solvency II was not ready for them.“There is a risk that when you try to live up to a much higher standard than everybody else does, then that creates an unlevel playing field,” Mr Iordanou said.“Fortunately, the BMA has recognised that and it is moving ahead by implementing a lot of aspects of Solvency II, which clearly improve our companies’ operations, while delaying a few things, like the economic capital model, etc, until we have a clearer vision as to where the world is going.“At some time we will have to set the standard — and the standard is Solvency II. With several aspects of Solvency II being looked at and having to be tweaked, we welcome the delay that the BMA has given us.”Mr Iordanou said reinsurance was a global industry, which needed a global regulatory standard, which would overcome the expense of regulatory duplication, an expense that companies inevitably passed on to customers.Craig Swan, director, Insurance Supervision at the BMA, said: “I think it’s important to note that Solvency II is a European standard and the BMA has it own vision of what our regime should look like. We believe that, in order to achieve our goals, the industry might take a while to reach those enhanced standards. So in our programme, we always had a phasing-in period. We continue to revisit that issue and look at the pace at which we are phasing it in to make sure it makes sense for our industry.”