Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

Bermuda is the largest jurisdiction for captive insurance, with captive insurance companies regulated by the Bermuda Monetary Authority.

In relation to aircraft insurance, apart from when the relevant aircraft is ‘ordinarily based’ in Bermuda, Bermuda insurance legislation does not apply and it is typically the case that insurance is placed in the principal aviation insurance centres of London and New York.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

There are no statutory provisions in relation to such clauses in Bermuda. The position under Bermuda law will reflect English common law principles, which are of persuasive, if not binding, effect before the courts of Bermuda.


Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Subject to the usual enforceability qualifications, such arrangements are effective under Bermuda law and are common in aircraft finance transactions.


Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

With respect to an owner, section 76 (4) of the UK Civil Aviation Act 1982 is extended to Bermuda to the effect that loss or damage caused by an aircraft in flight or by a person in, or an article, animal or person falling from, such an aircraft, is transferred to the person to whom the owner has demised, let or hired out the aircraft if the demise, let or hire is for a period of more than 14 days and no crew member is employed by the owner.

In general terms, a lessor or financier would not otherwise be liable solely by operation of Bermuda law.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

Save as noted in question 33, the owner of the aircraft would be subject to strict liability by virtue of section 40(2) of the UK Civil Aviation Act 1949, extended to Bermuda.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

There are no specific Bermuda law requirements.