The Bermuda Monetary Authority proposal to recognise parametric insurance structures as a new class of Special Purpose Insurers, has drawn comment from law firm, Conyers.

The BMA published a consultation paper January 21, to introduce the proposed new class, the Parametric Special Purpose Insurer (PSPI).

The law firm said the regulator had taken another step towards modernising its insurance-linked securities regime.

Conyers director Alexandra Macdonald said: “The proposal reflects the BMA’s continued focus on supporting innovation within Bermuda’s ILS market, while ensuring that the regulatory framework remains robust and aligned with international standards.

“The possibility of this new class has been under consideration by the BMA over recent years. With the continued growth of the ILS industry, the BMA is looking to ensure that Bermuda’s regulatory framework continues to address the wide variety of structures.”

While still in its consultation phase and therefore subject to change, Conyers noted some of the proposed key features.

Ms Macdonald wrote: “The PSPI class is intended to enhance the existing SPI framework and is specifically designed to allow for parametric business, including swaps and derivatives, by using the well-established fully collateralised framework.

“Consistent with SPIs, PSPIs will be permitted to carry on either a restricted basis (with specific named cedant(s)) or unrestricted basis (with unnamed but sophisticated and highly rated cedants).

“For PSPIs, the BMA is considering expanding the type of cedants to allow for additional types of sophisticated participants, such as qualified regional and national corporates and entities that can demonstrate a mature risk function and experienced insurance buyers.

“Given the critical role to be played by third parties in validating risks for a parametric programme, there will be an emphasis on ensuring that all external parties are appropriately sophisticated.”

The BMA intends to amend the Insurance Act to incorporate the new class in the second quarter of 2026. Feedback on the consultation paper is requested by 27 February 2026.