The inaugural Bermuda Insurance Institute (BII) and Bermuda Insurance Management Association (BIMA) Education Summit provided insights into the captive insurance industry to newcomers in the field.
Lawrence Bird, president of BIMA, outlined the challenges posed by Solvency II, the Dodd-Frank Act and competition from other domiciles, but Bird said he felt sure Bermuda would remain innovative in meeting these challenges and continue leading the way in captive development. Lawrence said that the Island’s tremendous infrastructure and the quality of professionals involved would ensure Bermuda remains the largest and leading captive domicile internationally.
The summit addressed a number of topics, including:
The value of working together: The discussion covered how Bermuda’s interests are best served through cooperation and consultation, particularly with the regulator, and conveyed why this remains one of Bermuda’s leading strengths.
An overview of captive formation in Bermuda: A panel addressed the close cooperation of the regulator with industry and the importance of an approach that is light, fl exible, but realistic for the captive sector. The debate also touched upon Bermuda’s renowned speed to market.
Anti-money laundering regulatory compliance review: A session addressing anti-money laundering and anti-terrorism fi nancing legislation. The discussion dealt with the need for a risk-based and proportionate approach that takes into account the specifi c demands of each jurisdiction. The debate also touched upon the need to know your client within an enterprise risk management framework.
Bermuda regulation—an international context: The discussion outlined Bermuda’s leading international position within the fi eld of regulation and expressed confi dence that the Island is well positioned to handle regulatory challenges such as Solvency II.
Bermuda regulatory update—clarification of insurance classes; new legislation; consultation papers in the works: The Bermuda Monetary Authority (BMA) outlined new enhanced reporting requirements for limited purpose insurers and what will be required in a future comprehensive statutory filing regime.
The impact of regulatory changes on captive audits: The session addressed how Solvency II equivalency will affect financial audits in terms of scope, risk, planning and cost. It is expected that such changes will help improve market stability and reputation, while proportionality will spare the captive sector any excessive regulatory burden.
Current trends in captive investing: The discussion provided a highlevel oversight of the role of an investment manager in determining the investment strategy taken by a captive, specifically the difference between passive and active investment management. The panel addressed challenges from start-up to the growth phase, and how a captive’s collateral position can affect its investment strategy.
Corporate governance—how to manage ever-increasing exposures and responsibilities: The discussion addressed the BMA’s Code of Conduct and its application to the captive sector. It detailed how the code has enshrined corporate best practice and applied proportionality to its use in the captive space. The debate also touched upon the legislative responsibilities of directors outlined by the Companies Act.
Current trends impacting the Bermuda market: The panel discussed the current state of the global alternative market with emphasis on possible new growth markets for Bermuda, including Canada and Latin America. The panel also noted that many existing captives are adding new lines of business to complement the more traditional P&C lines.
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