BMA attempts to calm fears over group supervision
Bermuda re/insurers have warned that proposals by the Bermuda Monetary Authority to impose mandatory group supervision on them could lead to conflicts with regulators in other countries where they operate.
The warning came in response to a consultation by the BMA, which is considering establishing mandatory group supervision where an insurance group is headed by a Bermuda-specified re/insurer or where the insurance group is headed by a Bermuda company that is not itself a subsidiary of any other entity.
The BMA launched the consultation last December with the aim of enhancing its group supervision framework. It wanted to ensure that group supervision was mandatorily triggered by the presence of both a registered insurance company in Bermuda and its ultimate parent, where the parent company also controlled insurers outside of Bermuda.
It also wanted to have the power to designate and register an insurance holding company through which supervision would be exercised, in cases where the parent company was not an insurance entity.
In a letter to stakeholders, the BMA attempted to assuage fears about regulatory conflict, saying that the supervision would not be triggered where the parent company was not incorporated in Bermuda.
It added: “Whether or not the Authority seeks to engage in group supervision will be considered on a case-by-case basis; the Authority will have regard to whether the insurance group is directed or managed from Bermuda or whether the insurer in the insurance group with the largest balance sheet total is a Bermuda-specified insurer.
“In these cases, the BMA will notify the relevant entity of the Authority’s intention to act as group supervisor and consider any representations made by the relevant entity.
“As it relates to the concerns regarding potential regulatory overlap, it is anticipated that the risk of regulatory inefficiencies would be mitigated through engagement with the respective entities and existing supervisors.”
The BMA said it would not take any sudden actions but would engage with the company and its relevant regulators when the conditions that trigger mandatory group supervision are met.
“The Authority has reviewed the potential impact on current insurance groups in Bermuda and does not anticipate significant disruptions to the operations of existing colleges of supervisors for the impacted groups,” the BMA said.
The BMA said stakeholders also raised concerns about the apparent inflexibility of the BMA to withdraw as a group supervisor, adding that the proposals should include specific conditions under which the Authority may withdraw.
But the BMA said companies would have the ability to make written representation to the BMA where it had signalled it planned to withdraw and that sufficient time - typically 12 months - would be afforded to impacted companies where the BMA was withdrawing and another regulator was taking over supervision.
The BMA also said it had dropped plans to designate an insurance company as an insurance holding company and to instead continue with the current process of designating a company in the group as a designated insurer for the purposes of group supervision.
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