The regulatory requirements that apply to (re)insurers in Bermuda depend on the category of (re)insurers. This classification is based on the BMA`s assessment of the nature, scope and complexity of the (re)insurer`s activities; in particular, whether the classification should be that of a commercial insurer (which carries out a general or long-term insurance activity), a limited-use insurer (which includes captive insurers, specialised insurers (SPIs) and guaranteed insurers) or an innovative insurer. INSURANCE REGULATORY SANDBOX (sandbox): The sandbox will allow businesses to test new technologies and offer innovative products, services and delivery mechanisms to a limited number of policyholders or clients in a controlled environment and for a limited period of time. After reviewing a company`s proposal, the BMA determines the legal and regulatory requirements that are changed for their duration in the sandbox. This will be communicated to the company. The sandbox contains the following options as license categories: Insurers that carry out insurance activities in an innovative way can apply for a Class IGB license (if the company has general operations) or a Class ILT license (if the company is engaged in a long-term business activity). ITGB and ILT classifications allow companies to experiment with new technologies and/or offer innovative products to a limited number of policyholders for a limited period of time. The company is placed in a regulatory sandbox while the BMA evaluates the terms of the company`s proof of concept and the corresponding regulatory requirements for the future. Once the insurer has successfully demonstrated the feasibility of its business model, it can apply for a regular insurance license. Over the years, Bermuda has adopted a risk-based regulatory approach that encompasses the core principles of the International Association of Insurance Supervisors (which provides for better supervision of companies with riskier profiles) and the rules applicable to commercial insurers under the European Union`s Solvency II Directive. Bermuda`s commercial insurance framework has been considered by the European Commission to be fully equivalent to the regulatory standards applied under Solvency II, meaning that Bermuda commercial insurers and reinsurers can do business in Europe as if they were EU-based companies. In addition, the National Association of Insurance Commissioners (NAIC) – the U.S.
standards and regulatory support body established and led by the U.S. Supreme Insurance Regulatory Authority – has included Bermuda on its list of “qualified jurisdictions” since January 1, 2015. This means that Bermuda-based commercial (re)insurers are entitled to reduced (re)insurance requirements under the NAIC Act and the provisions of the NAIC Reinsurance Credit Model. In addition, Bermuda has reciprocal jurisdiction status as of 1 January 2020, which means that Bermuda `re)insurers will be regulated on the basis of their individual risk-based profile. Class IIGB, on the other hand, is a non-sandbox class of innovative insurers and was developed primarily for insurance business models that use digital assets. A long-term insurer is classified as a Class C insurer if its total assets are less than $250 million, as a Class D insurer if its assets are between $250 million and $500 million, and as a Class E insurer if its assets exceed $500 million. With regard to limited-use classifications, a single-parent captive is registered as a Class 1 insurer if he subscribes to a general insurance undertaking and as a Category A insurer if he takes out long-term insurance contracts. A multi-parent captive (such as rent-a-captives, separate accounts (protected cells), and property and casualty and mutual insurers) is registered as a Class 2 or Class 3 insurer if it underwrites general business and as a Class B insurer if it enters into long-term contracts. All commercial insurers are subject to increased capital and reporting obligations.
The business plan submitted by the applicant should address the aspects set out in the IALC Bulletin, in addition to the requirements discussed in the following documents, which are available here on the BMA website: Bermuda has a multi-licensing regulatory system that classifies licensees into general categories of insurance, long-term insurance companies. Classes of special insurers, innovative classes, classes of guaranteed and intermediate insurers:. An SPI is the most commonly used fully secured vehicle for ILS transactions. Applicable insurance regulations are minimal. INSURANCE MANAGER: Refers to a person who is not an employee of an insurer and who pretends to be a manager with one or more insurers, regardless of whether the functions he or she performs as such go beyond the maintenance of insurance accounts and records. Like IPS, guaranteed insurers (which are also required to fully guarantee liabilities) are used for more complex ILS transactions and therefore involve a higher level of supervision and regulation. CLASS 2: Multi-owner captives, defined as insurance companies owned by unaffiliated companies, provided that the captive bears only the risks of the owners and affiliates of the owners and/or the risks related to or arising from the business or business of the owners and affiliates. Regarding current trends in the insurance market in Bermuda: Please direct any questions regarding insurance licensing issues to Licensing@bma.bm. SPECIAL INSURERS (SPI): For a company to be considered for registration as an IPS, it would have to meet the criteria discussed in the IPS guidelines. The SPI is licensed under a limited or unrestricted license. A restricted IPS may conduct special-purpose transactions with certain assignors approved by the Authority. While unrestricted IPS can do business with any transferor if the transferor is rated A or higher in terms of financial strength by AM Best or an equivalent rating from a credit rating agency recognized by the authority.
For the purposes of registration, class 3A, 3B and 4 commercial licences shall be granted to undertakings engaged in general insurance activities and class C, D and E commercial licences shall be granted to undertakings carrying on long-term insurance activities. The insurance market in Bermuda has evolved (thanks in part to its skilled and innovative workforce and the pragmatic approach of its insurance regulator), so that Bermuda now has an established captive industry and is home to more than 30 large international (re)insurance trading companies. Bermuda is also the leading market for insurance-related securities products (ILS), driven by the convergence of insurance and capital markets, and is still at the forefront of innovation in the insurance market today. INSURED INSURER: refers to an insurer that carries out ad hoc operations but is not a “special insurer”. Guaranteed insurers enter into transactions on a fully guaranteed or fully funded basis. CLASS 4: Insurers and reinsurers who take out direct risks of excess insurance and/or reinsurance against material disasters. Applications for licenses under the Act, accompanied by relevant documents in accordance with the IALC Bulletin, must be sent by e-mail to Authorisations_eApplications@bma.bm. Completed personal declaration forms must be attached to the IALC application along with all appointments of directors, officers and officers. More information on the insurance regulatory sandbox and the Innovation Hub can be found on the organization`s website here. INSURANCE BROKER: A person who organizes or places insurance transactions with insurers on behalf of potential or existing policyholders. The BMA has announced that it will not oppose BMA-supervised businesses (including insurance companies) that do business with a licensed cannabis grower, processor or seller; provided that the conduct of such transactions is not contrary to the criminal offences provided for by the laws of a foreign jurisdiction and constituting criminal conduct.
It is important to note that cannabis-related activity must be legal at all levels in the foreign jurisdiction. LONG-TERM – CATEGORY C: Long-term insurers and reinsurers with total assets of less than $250 million; and not registrable as a Category A or B insurer. Insurers and insurance intermediaries that operate in an innovative way can apply for an innovative insurance license. CLASS 3: Applies to insurers and reinsurers not included in Classes 1, 2, 3A, 3B or 4. These include structured reinsurers that underwrite third-party activities; insurers who take out direct policies with third parties; Captive single-parent businesses, groups, associations, agencies or joint ventures where more than 20% of the net premiums recognised come from risks not related to the owners` business. The main law for insurance-related activities in Bermuda is the Insurance Act 1978 (Insurance Act), which applies to any person who carries on insurance business in or from Bermuda, including insurance intermediaries (such as managers, brokers, agents and sellers), as well as insurers and reinsurers. The Bermuda Monetary Authority (BMA) is Bermuda`s insurance regulator. Applications for IALC are assessed under the minimum registration criteria set out in the list contained in the Law.
INSURANCE AGENT: A person acting with the authority of an insurer on his or her behalf in relation to some or all of the following matters: the initiation and receipt of proposals, the issuance of policies and the collection of premiums, proposals, policies and premiums related to the insurance industry.