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The Bermuda insurance and reinsurance sector enjoyed a vibrant 2016, despite markets globally remaining relatively flat.
A.M. Best has reported that the global operating environment remains negative. Factors such as low rates, broader terms and conditions, the unsustainable flow of net favourable loss development and low investment yields are expected to continue to limit risk-adjusted returns over the longer term.
Disruptions in global markets have often led to important industry developments in Bermuda, and 2016 was no exception.
One of the Island’s key advantages in this arena is its sophisticated level of sensible yet firm regulation.
The grant of full equivalence with Solvency II by the European Parliament and Council came into force on 26 March 2016 (effective as of 1 January 2016). As a result, Bermuda’s commercial reinsurers are considered by all European Member States as applying an equivalent reinsurance regime in accordance with the requirements of Solvency II. This means that Bermuda’s commercial reinsurers will not be disadvantaged when competing for, and writing business in, the EU.
Along with the Island’s status as an NAIC “Qualified Jurisdiction”, Solvency II equivalence has cemented and strengthened Bermuda’s position as a leading reinsurance market.
Existing and start-up commercial insurers and insurance groups demonstrated a surge in interest in 2016 to form or expand substantive operations on the Island, partly as a result of these regulatory endorsements.
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Bermuda Insurance Update – 2016 Year in Review