Bermuda gets Solvency II equivalency approval
Bermuda's regulatory scheme for managing larger (re)insurers is broadly equivalent to Europe's forthcoming Solvency II regime, according to the European Insurance and Occupational Pensions Authority (Eiopa).
In a formal submission to the European Commission (EC), Eiopa said that the regulatory regime for larger (re)insurers in Bermuda was mostly equivalent to the requirements of Solvency II, but added there were some caveats.
The pan-European supervisor raised concerns that the regulation of smaller firms, and especially captives, was not on a par with EU rules.
Eiopa has been tasked with determining whether the EC should consider if certain countries outside the EU had regimes that were as rigorous as Solvency II - which it is now thought will be implemented on 1 January 2014.
The first three countries to apply for formal assessment of their equivalence were Bermuda, Japan and Switzerland.
Bermuda is home to 14 of the 40 largest reinsurers in the world.
Obtaining equivalence has been considered crucial for the island, as its reinsurers write 40 percent of European property catastrophe reinsurance and 27 percent of the continent's broker-placed reinsurance.
By being granted equivalency status, European cedants will be able to take full capital relief for reinsurance bought from Bermuda reinsurers.
"Eiopa's advice is that Bermuda meets the criteria set out in Eiopa's methodology for equivalent assessments under Solvency II," the authority said last week.
Bermuda's regulatory regime is based around a staggered approach that depends upon the size of the firm in question.
Eiopa said that while the regime for the larger firms (Classes 3A, 3B and 4) was mostly equivalent, it had some concerns.
One of the main areas where Bermuda was considered deficient was in systems of governance and public disclosure.