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Over the past six years or so, Bermuda has been positioning itself to obtain “regulatory equivalency” from the European Commission under the European Union’s Solvency II Directive.
Solvency II is the EU’s legislative programme to be implemented in all of its Member States which introduces a new, harmonised EU-wide insurance regulatory regime.
There are three (3) key areas of equivalency: reinsurance supervision, group solvency calculation and group supervision. Bermuda is one of only two non-EU countries selected for assessment for equivalence under all three of the foregoing articles of the EU Directive.
For Bermuda’s commercial insurers, equivalency is critical so that they may continue to transact business within the European Union on a level playing field. Otherwise, amongst other things, they may be forced into a restructuring and/or be forced to provide security in favour of EU cedants because the capital in the Bermuda company may not be fully recognised for European solvency purposes. Any such requirements on the operations of Bermuda companies in Europe could harm their competitive position and the Bermuda commercial insurance market generally.
To continue reading full articles in PDF format:
Bermuda: Solvency II Update