BMA Regulatory Reforms Strengthen Bermuda's Insurance Landscape

The Bermuda insurance market has witnessed significant regulatory shifts recently enacted by the Bermuda Monetary Authority (BMA). These reforms play a pivotal role in bolstering the credit profiles of insurers operating within this jurisdiction, according to Fitch.

The regulatory landscape underwent a substantial overhaul, as outlined in a 2023 consultation paper. These reforms, now enacted, are aimed at fortifying the resilience of Bermuda's insurance sector. Notable updates to the regulatory regime include increases to reserve discount rates, assumed default rates and lapse rates, more restrictive asset selection, and more granular governance and risk management, Fitch said.

The BMA will also require more transparency around transactions as part of its approval process.

Additionally, in 2023, the 15 percent Bermuda Corporate Income Tax Act became law and will be implemented in 2025. This remains lower than the US rate and is not expected to have a material effect on insurers.

The updates center around ensuring that the BMA's insurance regulations remain sufficiently transparent and fit for purpose while maintaining its Solvency II equivalence and NAIC reciprocal jurisdiction status.