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Regulation: Beefing Up the BMA
London and Bermuda Newsletter
Bermuda’s insurance industry regulator, the Bermuda Monetary Authority (“BMA”), has almost doubled the number of its staff since 2002 to meet its supervisory obligations. Following the recent introduction by the BMA of a risk-based capital model, the Bermuda Solvency Capital Requirement (“BSCR”), those obligations can be expected to increase further.
With “Solvency II” due to take effect in the EU in 2012, the introduction of the BSCR is seen as a vital step to enable Bermuda insurers and reinsurers to continue to trade and compete effectively within the EU.
The BSCR will significantly enhance the BMA’s ability to assess the solvency of Bermuda insurers and reinsurers by forcing companies to focus on the riskier aspects of their portfolios and the impact of such business on capital. The initial focus has been on Bermuda’s “Class 4” companies - Bermuda’s largest and most diverse - who were required to apply BSCR for their 2007 year end and to submit the results to the BMA. Legislation is expected to be adopted this year to compel Class 4 insurers to apply the BSCR standards for their 2008 year closings.
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