In a timely boost to the Bermuda (re)insurance market and as an important vote of confidence in the Bermuda Monetary Authority’s supervisory regime, the European Commission (EC) has declared Bermuda’s commercial (re)insurance regime fully equivalent to Solvency II. This is hugely significant for Bermuda and means that Bermuda commercial (re)insurers and insurance groups supervised in Bermuda will not be at all disadvantaged in operating in Europe (or indeed elsewhere on the globe) when Solvency II takes effect on 1 January 2016.
On 26 November 2015 the EC adopted a delegated act (Delegated Act), which recognises Bermuda’s prudential framework for its commercial insurers (i.e. those insurers registered as Class 3A, 3B or 4, in respect of general insurers, and Class C, D or E, in respect of long term insurers) and group supervision as being fully equivalent to regulatory standards applied to European reinsurance companies and insurance groups in accordance with the requirements of the Solvency II Directive.
The adoption of the Delegated Act grants full equivalence for an unlimited period. However, the Delegated Act is subject to a three month review by the European Parliament and Council. Once the Delegated Act comes into force, the equivalence decision will be applied retroactively to 1 January 2016.
Bermuda’s captive insurers (i.e. Class 1, 2 and 3 and Class A and B insurers) and special purpose insurers remained out of the scope of the Solvency II equivalence assessment and, as such, the regulatory regime in respect of such insurers remains largely unchanged.
Should you have any queries or wish to obtain any advice regarding the equivalence of Bermuda’s regulatory regime with Solvency II, please contact us.