Karel Van Hulle, the EC's head of unit for insurance and pensions in Brussels, indicated to the Bermuda Monetary Authority (BMA) Regulatory Forum in Hamilton that Bermuda will be able to gain third-country equivalency with Solvency II for regulation of its major commercial re/insurance market without having to apply the more stringent supervision standards to the island's captive insurance companies.
The discussion also buoyed further a largely-held belief that Bermuda was on track to be accepted by the European Union in 2013, as having a regulatory posture in line with Solvency II's Core Principles.
The BMA is seeking Solvency II Equivalency, which would preserve for Bermuda's commercial insurers and reinsurers an equal footing with their European counterparts when the Solvency II regime goes into effect in 2013. Bermuda companies approved by the BMA would need to endure no further regulatory vetting to compete in the European market.
But while the Bermudian authorities have been working to expand the BMA's regulatory scope in line with the new regulatory standard, they also advanced a separate discussion with European officials as to why captives should be exempt from what would be overly rigorous solvency controls and corporate governance.
Mr. Van Hulle indicated during the conference that so-called 'segmented equivalency' was possible, providing for the inclusion of the island's major writers, while excluding captive insurance companies.
Bermuda's regulators and captive management professionals had led efforts to persuade European officials as to why captives should be treated differently.
Meanwhile, the EU's adviser to the Ministry of Finance, Alastair Sutton, told the Forum that while Bermuda (a British Overseas Territory) lacked sovereignty, it was still receiving equal treatment as an insurance domicile in Brussels.
He noted that the BMA had "performed miracles" in strengthening its regulation and had positioned itself well to achieve equivalence.
Two other non-European countries - Japan and Switzerland - are being considered for equivalency along with Bermuda.
