Bermuda, Explained

Commentary November 21, 2024 at 01:07 AM
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What You Need To Know

  • The Bermuda Monetary Authority oversees insurers in Bermuda.
  • One BMA strategy involves reviews of deals between affiliates.
  • A new corporate income tax is set to take effect Jan. 1.
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Bermuda's long-term insurance industry is helping to close the world's pension protection gap, thanks to the work of its financial services regulatory agency, the Bermuda Monetary Authority.

The gap — the difference between the amount of money people need to live comfortably in retirement and the amount they have saved for retirement — has ballooned to around $1 trillion, according to the Global Federation of Insurance Associations.

The BMA has positioned Bermuda as the risk capital of the world, and as a place for insurers and reinsurers to create retirement savings solutions, by combining support for innovation with stringent oversight.

Extra Protection

The BMA operates with a high level of transparency, maintaining a consistent, open dialogue with companies' boards, officers and risk executives.

This approach allows for a dynamic regulatory environment where companies can innovate within a framework that prioritizes risk management, regulatory compliance, and consumer protection.

BILTIR member companies' assets reflect a high level of diversification. About 77% of the companies' assets have additional layers of protection through mechanisms such as secured trusts.

Affiliated Transactions

The BMA also offers a proactive approach. One of its strategies is to provide a pre-approval review process for transactions involving two affiliates of the same corporate family.

The pre-approval process for affiliated transactions helps the BMA scrutinize the deals and mitigate potential problems before the problems materialize.

Global Relationships

Bermuda has legal and regulatory systems based on common law, with the right of appeal to the United Kingdom's Privacy Council.

This framework has provided a strong foundation for BMA relationships with regulatory bodies around the world.

Bermuda's regulatory framework is formally recognized and approved by both EU and U.S. insurance regulators, highlighting the jurisdiction's compliance with international standards.

Having global relationships is crucial for a small jurisdiction like Bermuda, because those relationships ensure that Bermuda's regulatory framework is both robust and compatible with international best practices. This makes Bermuda an attractive destination for international businesses in the insurance and reinsurance sectors, where regulatory compatibility is essential.

Fiscal Policies

In addition to having a strong regulatory body, Bermuda has taken a forward-thinking approach to fiscal policy.

One prime example is the passage of a new corporate income tax. The tax, which is based on an Organisation for Economic Co-operation and Development framework, is set to take effect on Jan. 1, 2025.

The new tax rate is designed to meet international expectations while remaining competitive, ensuring that Bermuda continues to attract global businesses.

The Bermuda government used a consultative and progressive process to develop and implement this new tax, reflecting the BMA's efforts to establish policies that are both effective and business-friendly.

Hamilton, Bermuda. Credit: Andrew F. Kazmierski/Shutterstock

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