Insurance and reinsurance in 2008
Date Posted: Monday, February 11, 2008Author: Leila Madeiros
Business & Economy, Insurance & Reinsurance, Bermuda 2008
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With hurricane season over, this year seems destined to be a successful year for our industry. What may get lost in the relief is the fact that the formation of Subtropical storm Andrea marked an earlier beginning to the season and that the 2007 season became one of the four recorded Atlantic seasons that had more than one category 5 storm (the others being 1960, 1961, and 2005). We will have to wait to see what 2008 may bring.
On the regulatory front, the constant has been change. In Bermuda, the Bermuda Monetary Authority (BMA) embarked on a recalibration of the Class 4 regime and to that end Class 4 companies have been engaged in an extensive consultation process with the BMA which will be launching its Bermuda Solvency Capital Requirement Model together with changes to the Statutory Financial Return and an additional requirement to file audited GAAP accounts that will be publicly available.
These changes mark a further step to Bermuda’s regulatory regime being regarded of the highest level as already revealed by Jeremy Cox, the Supervisor of Insurance at the BMA that the Island’s standards of supervision has been viewed in a positive light by the international inspectors referring to the recently published IMF report on Bermuda at the recent Mealey’s conference held in Bermuda. ABIR applauds the BMA for this achievement and will continue to support regulatory initiatives that maintain Bermuda’s high observance with the International Association of Insurance Supervisors (IAIS) core principles and implementation geared for the Bermuda market.
The pending regulatory changes are not limited to Bermuda. Our companies are global companies with operations in over 100 countries and 16,000 employees and the Bermuda market continues to monitor the developments in Europe with the implementation of the reinsurance directive and continuing work on Solvency II and the United States (NAIC) latest proposals to introduce a scheme to rate non-US insurers for reductions in collateral requirements. In advance of adoption of any specific NAIC proposals in this area, individual States are also working on their own proposals for collateral reductions that may impact Bermuda companies.
Finally, Bermuda must stay vigilant on US public policy issues. A handful of large US commercial insurers continue to advocate for punitive tax legislation intended to squelch competition by non US insurers. The legislation is targeted at the use of affiliated reinsurance transactions by non US insurers and reinsurers.
Although no legislative proposal is on the table, the Senate Finance Committee staff continues to research the issue. Meanwhile, business and consumer insurance buyers, and Bermudian and European insurers continue to work together to demonstrate the value brought to the US consumer by competition afforded by the non-US insurer groups.