Bermuda is the preferred jurisdiction for the world’s captive insurance industry, and that is no accident.
Delegates at the 13th Bermuda Captive Conference were told that it has taken hard work, a collaborative approach and a history of innovation to attain and maintain the ingredients of that success.
But being at the top of the pile today is no guarantee that the island will remain there in the future. And with increasing global regulation and compliance thresholds to meet, the island must guard against complacency and stay focused to maintain its position.
Those were some of the takeaway points from a round-table panel discussion at the start of the multi-day conference being held at the Fairmont Southampton.
Grainne Richmond, president of the Bermuda Insurance Management Association, said: “Collaboration is obviously the key to moving forward and staying ahead of the game and that involves us all working together.”
Ms Richmond was the moderator for the panel, which featured Jeremy Cox, Jamahl Simmons, Kiernan Bell and Alan Gier.
Bermuda’s navigation of international regulatory obligations, which has seen it gain Solvency II equivalency with the European Union and a similar “seal of approval” from the US, in the form of a memorandum of understanding with the US National Association of Insurance Commissioners, has brought the island praise and respect from various corners overseas.
This was confirmed by Mr Cox, chief executive officer of the Bermuda Monetary Authority, who mentioned a recent meeting with regulators and industry representatives in Europe.
He said: “At the end of discussions, two or three people came up to me and said they wanted to meet me because what Bermuda achieved in terms of Solvency II equivalence was phenomenal. To be one of two jurisdictions that have the seal of approval from Europe, and to be one of only two jurisdictions that has the seal of approval from Europe and the US.”
He added: “Others who are looking on see it as incredible that we have achieved these successes.”
However, further regulatory requirements and assessments are on the near horizon, and Bermuda is working to address them.
Mr Simmons, Minister of Economic Development and Tourism, praised government technical officers and the members of the former government for ensuring the island was well positioned to stay compliant.
He said: “It is important going forward that we recognise that we have a great team. It was a team effort to make this happen, and what is important about this process is that we do one thing very well when it comes to this industry — and that is keeping politics mostly out of it. That is part of how we are able to get this done.”
He said Parliament was sitting earlier than ever before this month, in part to get some important legislation approved to ensure assessment obligations are met.
“The beneficial ownership Bill will go to Parliament in two or three weeks. There’s also the anti-money laundering bill. There are a number of things we have in the pipeline,” he said.
“We are aware of the need to get this done. We have established a cabinet sub-committee that is biweekly that is updating on where everybody is and what we need to do to stay head of the curve.”
An OECD assessment, the EU’s Code of Conduct Group and the Caribbean Financial Action Task Force review, are among international challenges facing Bermuda.
Mr Cox said: “The minister is correct when he talks of staying ahead of the curve and making sure we are performing well in these assessments — and not just performing well, but performing above our peers. It’s critical to our reputation and relationships with the regulatory community.”
The island’s ability to do the right thing and blend in its own brand of innovation has secured it the top position in the captive insurance world. Bermuda is home to almost 800 captive insurance companies supporting many Fortune 500 companies.
Mr Gier, president of the Bermuda Captive Owners Association, and global director, corporate risk management and insurance for General Motors, said the island’s ability to continually meet international assessments and reviews was a source of comfort.
“One of the things we reflect on is how we are doing on a compliance side,” he said, explaining that when he gives a presentation to the company on the choice of domicile for its captive “it is important to articulate the great effort that is being done in Bermuda. And Bermuda in our view is definitely a first-class domicile for captives and insurance in general”.
When asked about proposed US legislative moves by the Trump Administration that might impact Bermuda, Mr Gier said: “Some of the things they were pushing have taken a back seat — tax reform, the border adjustment tax, the wall, all these things are going to take a lot longer. A lot of it is still coming, what form it takes I don’t know, but it’s going to take a lot longer.”
Regarding Bermuda’s relationship with the US, Mr Simmons mentioned Government’s commitment to reopen its office in Washington DC, which he said was “because it is a very fast-moving situation”.
He added: “The story of Bermuda and what we give to the US public is one that needs to keep being told to the power players on a regular basis.”
That narrative was expanded by Mr Cox, who said the multibillion dollar losses the US faces from hurricanes Harvey and Irma would be felt by the US Government. But the benefit from having some of that risk diversified and spread offshore among insurers and reinsurers would be noticed.
“The relief that is going to be required from these storms is going to make the [US] government sit up and pay attention,” he said.
“If there ever was an opportunity for jurisdictions like Bermuda to make the case for offshore reinsurance, and the importance of it and the diversification of risk and the ability to get the ultimate customer a better price for that risk and also to save the Government money, I think it’s now.
“So I’m glad to hear the minister mention this DC office. Because Team Bermuda is going to have to get together, because certainly there is a story here that is going to have to be told.”
During the past five years the Bermuda Business Development Agency has played a central role in bringing new business to the island and securing business already operating here. Its role collaborating between industry, regulators, and the Government to ensure Bermuda maintains its position ahead of competing jurisdictions was highlighted by Ms Bell, chairwoman of the BDA.
Referring to opening remarks at the start of the conference by David Burt, Ms Bell said: “As we heard the Premier say earlier, what we are good at as a jurisdiction, it is collaboration at every level.
“The BDA make sure we are working with government, regulators and stakeholders to get the messaging right and respond to the needs of the market with new products to make sure regulation is sensible and preserves our reputation.”
For Bermuda to maintain its market-leading position, Mr Gier said it should get the message out about its level of collaboration and the good regulatory environment that differentiates it from others.
While Mr Simmons said: “We have to avoid complacency and continue our collaborative process. Complacency is our biggest threat. We have to be vigilant.”