Introduction to the Bermuda Insurance Market

 

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market conditions

 

Bermuda is one of the major international reinsurance centers. The company with the highest proportion in the market is the captive insurance company. As of the end of 2017, a total of 739 self-insurance companies were registered in Bermuda, of which 17 were newly registered in 2017. Bermuda captive underwrote a net premium of $54.7 billion for 2017. Bermuda is also the world's largest insurance linked securities (ILS) issuance market. In 2017, the issuance of ILS broke the historical record, reaching US $12.56 billion, making the size of the ILS market as high as US $31.06 billion at the end of 2017.

 

 

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regulatory agency

 

 

Bermuda Monetary Authority (BMA) is Bermuda's financial system regulator. Insurance regulation of domestic insurance companies, international insurance and reinsurance companies and exempted companies is carried out by the BMA. BMA supervision includes license authorization and issuance, daily supervision, policy formulation, legal services and enforcement.

 

important law related to insurance is the Insurance Law enacted in 1978 and its subsequent amendments.

 

in terms of capital regulation and solvency, BMA introduces a risk-based capital model to determine the regulatory capital requirements of insurers and reinsurers based on the uniqueness of their business.

 

 

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market participants

 

Bermuda's insurance companies mainlyis dividedare local companies owned by Bermudians and companies established by non-Bermudians (the latter are also called "exempted companies"). Local companies are mainly engaged in domestic business. Non-local companies mainly operate outside Bermuda from Bermuda.include:

 

multi-line international insurance and reinsurance companies, the most famous of which are Chubb and XL Catlin;

 

multi-line international reinsurance company, the more famous are PartnerRe and Renaissance Re;

 

professional single-line insurance company;

 

special purpose insurance companies, mainly "side trailers" that provide underwriting capital, and special purpose insurance companies established for the purpose of hairdressing catastrophe bonds.

 

 

4

 

 

Licence Type

 

 

 

Bermuda adopts a multi-license regulatory system, dividing non-life insurance companies into six categories and long-term life insurance companies into five categories, with special purpose insurance companies and comprehensive insurance companies (comprehensive insurance companies will no longer be licensed after 1 January 2013).

 

non-life insurance are as follows:

 

 

Category 1 is a self-insurance company that only covers the business of a single parent company or affiliated company. The minimum capital and surplus requirements for Class 1 non-life insurance companies are $120,000.

 

 

Category 2 refers to a multi-shareholder self-insurance company with shares held by non-affiliated entities. Such insurers can only cover the risks of shareholders and affiliated companies and risks related to the business operations of shareholders or affiliated companies.

 

Class 2 licenses also apply to self-insurance companies with single or multiple shareholders, if the net premium of such self-insurance companies does not exceed 20% from risks related to the business operations of non-shareholders or their affiliates. In other words, at least 80% of the net premiums that need to be met come from shareholders or affiliated companies. The minimum capital and surplus requirement for Class 2 insurers to maintain is $250,000.

 

 

means insurers and reinsurers that cannot be classified into categories 1, 2, 3A, 3B and 4. Captive insurance companies in category 3 can underwrite more than 20% less than 50% of non-related business. Class 3 insurers are required to maintain a minimum capital and surplus of $1 million.

 

 

small commercial insurers, their net premiums of more than 50% or 50% net losses and loss expenses come from unrelated businesses, while the total net premiums of unrelated businesses are less than $5 million. Class 3A insurers are required to maintain a minimum capital and surplus of $1 million.

 

⊙ Class B

a large commercial insurer, the net premium of more than 50% or the net loss and loss of 50% comes from non-affiliated business, and the total net premium of non-affiliated business is not less than US $5 million. Class 3A insurers are required to maintain a minimum capital and surplus of $1 million.

 

 

Type 4 insurance and reinsurance companies need to have statutory capital and surplus of not less than US $0.1 billion at the beginning of underwriting, and their planned business needs to include excess liability business and property catastrophe reinsurance business. Type 4 insurance and reinsurance companies are most important to the Bermuda market from an international business perspective.

 

In addition, pure life insurance companies can apply for long-term licenses. Long-term licences are also classified into multiple types according to their shareholding structure, sources of business and assets, which are not repeated here.

 

 

 

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