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16th of May 2012

Bermuda receives final Solvency II reports

Vicky Beckett 26/10/2011

Bermuda has received the European Insurance and Occupational Pensions Authority’s final reports on Solvency II equivalence.
 
The reports were approved by the European Insurance and Occupational Pensions Authority’s (EIOPA’s) Board of Supervisors last week and sent to the European Commission today.
 
The Bermuda Monetary Authority (BMA) has successfully completed a trial of the Bermuda solvency capital requirement (BSCR) for class 3A small and medium-sized enterprises (SME).
 
Phased implementation of the BSCR -SME will now begin at the end of 2011.
 
Currently, the BMA is assessing the group BSCR submissions received from companies for completeness according to its Draft Group Rules, as well as assessing the capital adequacy of the insurance groups that participated in the trial run.
 
Bermuda’s regime for commercial insurers, that is Class 3A, 3B and 4 firms, has met the criteria for Solvency II equivalence, with some areas of caution.
   
The report states that the principle of proportionality should apply to captives ‘given that they only cover risks associated with the group to which they belong.’
 
It allows for simplified methods and techniques to calculate technical provisions in order to ensure that methods are proportionate to the nature, scale and complexity of the risk supported by the insurance and reinsurance undertaking, including captive undertakings.
 
The configuration of the Bermudan regulatory regime with Solvency II in key areas was noted, such as the scope of group supervision and the solvency regime for groups.
 
In its October regulatory updates, the BMA has said: “Many of the caveats cover supervisory enhancements that were either in progress at the time of EIOPA’s review or are planned to come into effect by the end of 2012.”
 
Plans to address other problems will be published soon for an industry consultation.
The reports were approved by EIOPA’s board of supervisors last week and sent to the European Commission today.
 
EIOPA based its technical analysis on the principals for equivalence as outlined by the European Commission.
 
The decision represents the supervisors’ opinion about the equivalence of a third country and is not binding to the EU Commission.
 
Gabriel Bernardino, EIOPA’s chairman, said: “Third country equivalence assessments are an important instrument towards achieving global supervisory convergence in insurance.
 
“This could only be completed successfully due to the commitment of the Bermudan, Japanese and Swiss authorities to participate in this exercise and thanks to their cooperation, dedication and transparency.

Tags: Approved, Bermuda, EIOPA, Insurance, Japan, Solvency II, Switzerland

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