Monday, August 29, 2011
The pace of insurance company registration in Bermuda has picked up, bolstered in the main by a rise in special purpose insurers.
The latest figures released by the Bermuda Monetary Authority (BMA) show that 31 insurance companies have been registered in Bermuda so far this year. This represents a 30% increase for the seven-month period to July 31, 2011, and is an improvement on the 36 registered in the entirety of 2010.
While Jeremy Cox, CEO of the BMA, said the increased pace of registrations for this year was very encouraging, one specific area saw a marked upward trend in registrations. Cox explained that: “The area where we are seeing the largest single increase is in the Special Purpose Insurers (SPI) class. We have already seen 12 new SPIs registered this year. This compares to eight SPI registrations for the whole of 2010.”
The majority of the new SPIs - insurance entities that conduct special purpose business for a specific period of time - were formed in relation to the record-setting level of global catastrophes experienced during the first half of 2011, Shelby Weldon, the BMA’s Director of Insurance, Licensing and Authorisation, said.
According to Cox, altering the country's regulatory framework to accommodate SPIs in 2009 has resulted in the translation of market interest in these vehicles to a larger number of registrations being made. Cox added, that: "For example, it was exciting to see earlier this month the board of the California Earthquake Authority (CEA), that state’s quasi-governmental residential earthquake insurer, approve a USD150m catastrophe bond issue via a Bermuda SPI, Embarcadero Re. The choice of a Bermudian reinsurer for this latest CEA cat bond issue was a departure from previous normal practice for them, and a positive indication that markets seeking quality supervision remain confident in Bermuda."
Cox also noted the recent report by the European Insurance and Occupational Pensions Authority (EIOPA), which indicates that Bermuda’s regime for commercial insurers meets the criteria for Solvency II equivalence, although with some issues outstanding. Cox called this a "positive endorsement of the BMA's commitment to effective, quality risk-based supervision", stressing that Solvency II equivalence is "a great step in the right direction for Bermuda". He stressed that "our work continues on ensuring the framework enhancements we are putting in place build upon the effectiveness of Bermuda’s regulations and also remain consistent with international standards".
Weldon added that insurance registrations to date are also reflecting new business in both the captive and commercial insurance sectors of the Bermuda market. “Compared to 2010, Bermuda has also seen a rise in the level of Class 3 and Class 3A insurers being registered here. Five of each have already been registered up to July 2011. This compares to the four Class 3s and two Class 3As that were newly registered in total last year.”