Following the recent passing of the Insurance Amendment Act 2008, the Bermuda Monetary Authority (BMA) has announced that it will introduce the Bermuda Solvency Capital Requirement (BSCR), an enhanced solvency regime to apply to Bermuda's Class 4 reinsurers. The BSCR is intended to establish risk-based capital adequacy standards for high impact reinsurers. We have reported previously on the BMA's proposals for the BSCR (see the post here).
The legislation also allows the reclassification of the class 3 insurance sector, currently including firms ranging from captives writing a limited amount of third party business to large commercial (re)insurers. The reclassification focuses on the respective risk profiles of the class 3 companies. The reclassification also includes a new category for insurance special purpose vehicles (SPVs), to be known as 'Special Purpose Insurers', intended to make it less costly for SPVs to be established in Bermuda.
The BMA is focusing on its objective to achieve equivalence, or mutual recognition status, in Europe and elsewhere. Following implementation of the European Reinsurance Directive, now completed in most European states, full mutual recognition status between Bermuda and the European Union has the potential to simplify access by insurers and reinsurers in each market to the other.