17 November 2014Bermuda analysis

Bermuda recommended by NAIC

Bermuda, a domicile of choice for captives, has been recommended by the National Association of Insurance Commissioners (NAIC) for approval as a qualified jurisdiction.

Recommendations include Bermuda, Germany, France, Ireland and the UK and if approved by the full NAIC membership, the regulators will be placed on the NAIC’s first list of qualified jurisdictions.

Adopted by the NAIC in August 2013, the process was developed to evaluate the reinsurance supervisory systems of non-US jurisdictions for reinsurance collateral reduction purposes. Reinsurers licensed and domiciled in these five jurisdictions are eligible to be certified for reduced reinsurance collateral requirements under the NAIC's credit for reinsurance model law.

“The timely evaluation of these jurisdictions represents another important step forward in implementing reinsurance modernisation by the states,” said John Huff, NAIC reinsurance task force chair and director of the Missouri Department of Insurance, Financial Institutions and Professional Registration.

To date, 23 states have adopted reinsurance collateral legislation reform, which represents approximately 60 percent of the primary insurance premium in the US. There is a goal to add five more states in 2015, which would bring the total to more than 80 percent of the premium.

“Reinsurance collateral reform continues to play a prominent role in discussions with federal and international authorities. This move toward adding jurisdictions enhances the NAIC's position on this issue,” said Adam Hamm, NAIC president and North Dakota Insurance Commissioner. “We appreciate the cooperative efforts of these five authorities in working with state regulators.”