In the current socio-economic climate, one could be forgiven for thinking that international businesses use offshore jurisdictions to conduct their activities under a veil of secrecy, taking advantage of passive legislation and benevolent regulators.
However, Bermuda has taken significant steps to place itself as the benchmark for regulation and innovation. On 24 March, the European Commission awarded the British Overseas Territory with equivalent status under the Solvency II Directive.
This award came hard on the heels of another important accolade, as Bermuda was approved as a qualified jurisdiction by the US National Association of Insurance Commissioners. In addition, Bermuda was an early adopter of the Organisation for Economic Co-operation and Development’s common reporting standards and recently signed up to country-by-country reporting.
The result is that Bermuda’s insurance and reinsurance industry operates in a legal and regulatory environment that is on par with Europe and the US and, when measured against other offshore jurisdictions, stands in a peer group of one.
Solvency II finds its origin in the financial crisis of 2007-2008. Following calls for preventing excessive risks within the financial system, the European Union identified shortcomings in national supervisory models. The Solvency II directive sets up a risk-based prudential regime that regulates capital, governance and supervision, and disclosure and transparency requirements for the insurance and reinsurance industry.
