From strength to strength
Following a full year of incorporations in 2013, the BMA is looking forward to a busy time in 2014. Shelby Weldon talks us through recent successes.
I’m hoping for another successful year of new registrations in 2014. In 2013, we recorded 91 registrations, an increase of 70 percent year-on-year. The new firms covered both the traditional and the fast-growing alternative risk transfer sectors of the insurance market. In addition to 16 commercial insurers and 51 special purpose insurers, the number of new captives registered by the Bermuda Monetary Authority (BMA) in 2013 doubled the total recorded in 2012 (24 in 2013, 12 in 2012).
In 2013, the majority (33.3 percent) of new captives originated from within the US. While Bermuda is still attracting business from traditional markets, there is clearly a collective effort from the jurisdiction to innovate and find new business opportunities elsewhere.
The BMA notes the outreach to emerging markets such as Latin America as one example. Last year for the first time, there were dedicated Spanish language sessions at the Bermuda Captive Conference, aimed at potential captive clients from Latin America, and it was promising to see seven captives register from that region in 2013.
There were already some Latin American captives operating from Bermuda, so there was a base upon which to build, but the jurisdiction’s efforts are already paying off in that regard. Other jurisdictions from which new captives originated in 2013 include Bermuda, the Asia-Pacific, Africa and Europe.
In terms of lines of risk, property continues to be a very popular line being covered by Bermuda captives. However, from casualty to excess liability, and product liability to workers’ compensation, Bermuda’s captives continue to meet industry’s ever-changing demands for alternative risk transfer products.
Achieving this level of business in today’s competitive environment reinforces Bermuda’s unique ability to service the full spectrum of high-end, global re/insurance business. It also demonstrates the continued relevance of Bermuda as a jurisdiction as the market seeks diversification in alternative risk transfer.
Bermuda remains the domicile of choice for new captives because of the unique access our captives have to one of the world’s largest reinsurance markets, a deep and experienced pool of captive insurance expertise with a global reputation for innovation and excellence, and our effective and practical regulatory environment.
Regulatory developments
From a regulatory standpoint, we have to ensure that the BMA remains effective, correctly balances workable, risk-based supervisory regimes with international expectations, and effectively consults with those within our market who will be most affected by our regulatory changes.
Our overall goal as we keep moving forward is effective execution and, doing what is right for Bermuda. The BMA will continue using a risk-based and proportionate regulatory approach, recognising the diversity of the sectors within our market and the differing risk profiles of firms operating within them, so that Bermuda’s insurance companies remain appropriately supervised. Regulation here will remain workable for the firms and characteristics of our market.
With practicality foremost in mind, in the fourth quarter of 2013 the BMA engaged industry to participate in an enhanced reporting trial run. The trial run—which concluded on January 31, 2014—was a great success. We received a tremendous amount of feedback which will be considered for incorporation in the final electronic filing (e-filing) models. Based on this feedback, we announced in February that we were deferring implementation of the enhanced reporting requirement for Class 1, 2, 3, A, B and dual licence insurers for one year.
In the interim, we will be making further revisions to the e-filing models which will be published on our website in advance of the 2014 year-end filing deadline. Because much of the information is already reported to the BMA, the main change will be the manner in which the filings are reported—in this case, electronically. The intended outcomes of the trial run include supporting Bermuda’s position at international standard-setting bodies, while at the same time improving efficiencies in the filing process for both industry and the BMA.
The BMA recognises the factors that entrepreneurs value when choosing a jurisdiction for a new venture. Speed to market is vital, but this has to be accompanied by appropriate levels of regulatory due diligence over incorporation, licensing and authorisation functions, as well as the ongoing supervisory regime. The BMA is constantly working to ensure that we monitor and maintain the appropriate balance between these two areas and that we continue to develop the skill sets of its staff by enhancing technical competencies in order to apply supervision appropriately.
The number of new incorporations in 2013, combined with our continued progress in the regulatory equivalence exercises in Europe and the US, indicate that we have managed this balancing exercise well.
