BERMUDA Law and Practice Contributed by: Brad Adderley, Matthew Carr, Max Tetlow, Cathryn Minors, Josephine Noddings, Aleisha Hollis, Melinda Mayne, Milaun Perott and Mya Gibbons, Appleby
Climate Change Disclosure Requirements The BMA has been examining the impact of climate change on the Bermuda insurance industry, with the aim of appropriately integrating climate and wider environmental, social and governance risks into its regulatory framework. The BMA has been conduct- ing surveys and gathering feedback as groundwork, and in anticipation of guidance and requirements that will follow in the form of legislation or rules published by the BMA applicable to insurers. This development is significant given the social climate with regard to global climate change and risk, while also proving Bermuda’s commitment to and rigid stance in the regulation of the insurance sector, adding to its status as a premier insurance and reinsurance jurisdiction. From year-end 2023 onwards, insurers have been expected to carry-out an overarching climate risk status assessment regarding the implementation of an appropriate framework that includes a clear action plan, inclusive of timelines and a prioritisation approach, with a clear action plan to be implemented by year-end 2025. Recovery and Resolution Plans The (Recovery Plan) Rules 2024 became operative in May 2025 and set out detailed requirements for applicable insurers in relation to their recovery plans. Insurers who are mandated to prepare a recovery plan must also provide relevant documents and infor- mation to the BMA, as required. Additionally, these insurers are expected to maintain both electronic and printed copies of their most recent recovery plans at their head office for record-keeping and regulatory purposes. The BMA will consider the following factors in deter- mining whether an insurer should prepare a recovery plan under Section 6G: • whether the insurer conducts domestic business; • if the insurer’s three-year rolling average of total assets equals or exceeds USD10 billion; • if the insurer’s three-year rolling average of total gross written premiums equals or exceeds USD5 billion; and
thoughts and ideas, and which is not yet prepared for proof of concept and therefore not ready to apply for entry into the Sandbox. There is a dedicated working group for the insurance sector called the BMA Insur- ance Innovation Working Group. 10.2 Regulatory Response Concerning the regulator’s response to insurtech issues, see 10.1 Insurtech Developments . 11. Emerging Risks and New Products 11.1 Emerging Risks Affecting the Insurance Market There is no applicable information in this jurisdiction. 11.2 New Products or Alternative Solutions There is no applicable information in this jurisdiction. 12. Developments in Insurance Law 12.1 Significant Legislative or Regulatory Developments The developments set out in the following reflect the BMA’s ongoing efforts to refine and enhance its regu- latory regime. Most of the changes in the following are aimed at ensuring Bermuda’s solvency regime remains closely aligned with international standards like the Solvency II framework. Some of these chang- es are anticipated to impact insurers’ solvency posi- tions and market dynamics. Changes to the BSCR Formula, Lapse Risk and Best-Estimate Liability The BMA has implemented amendments to enhance the regulatory regime, particularly focusing on lapse risk and best-estimate liability (BEL) within the BSCR framework. These changes are intended to increase risk sensitivity and improve capital requirement accu- racy. Group Risk Margin The BMA utilises the cost of capital method for cal- culating the group risk margin. This tool forms part of the regulatory framework, reflecting the compensation needed by an insurer to bear specific risks.
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