The Association of Bermuda Insurers and Reinsurers has joined forces with Insurance Ireland to urge European policymakers to revise proposed securitisation rules, warning that the current framework could unintentionally exclude Bermudian-based insurers from a key European credit risk transfer market.

Abir and Insurance Ireland made the appeal in a joint industry position paper released this week as the EU reviews its securitisation framework, a process seen as central to strengthening the bloc’s financial competitiveness and supporting its Savings and Investments Union.

The organisations warned that aspects of the current proposal — including size thresholds, group recognition rules and safeguard requirements — could in practice exclude EU-authorised insurers that are part of groups headquartered outside the EU, including Bermuda and Switzerland.

Abir said such exclusions could narrow the pool of insurers able to provide credit risk protection to banks, increasing concentration risk and limiting lending capacity.

John Huff, Abir president and chief executive, said a well-functioning securitisation market allows banks to transfer credit risk while continuing to manage their underlying loan portfolios.

“A well-functioning securitisation market will enable banks to manage risk efficiently, free up regulatory capital, and expand lending to households, small and medium-sized enterprises and long-term investment projects,” Mr Huff said.

Under the arrangements, insurers provide unfunded credit protection that allows banks to transfer a portion of their credit risk without selling the loans themselves.

The industry groups said insurers have been active participants in the EU’s synthetic securitisation market since 2018 and operate under robust regulatory regimes, including Solvency II and equivalent supervisory frameworks.

The paper recommends targeted adjustments to the EU framework, including recognising group supervision in equivalent jurisdictions, calibrating size thresholds to reflect market realities and ensuring insurers can continue to participate in both simple, transparent and standardised securitisations and other resilient structures.

Abir noted that Bermuda’s market already plays a large role in supporting Europe’s insurance sector, with Bermuda reinsurers paying about €24.8 billion to EU policyholders and cedants for property, casualty and life claims between 2016 and 2020.

The organisation said ensuring a broad and competitive pool of insurers would help European banks expand lending while staying prudent.