The BMA has a dedicated insurance licensing team that reviews all proposals to set up new businesses. In addition to internal staff review, applications are subject to independent review and decision by a committee of senior Authority staff. Applications are closely vetted for the fitness, propriety and underwriting experience of the management, the plausibility of the proposed business plan and the level of capitalisation relative to the proposed risk profile, among other factors.
Entities wishing to apply for a licence under the Insurance Act 1978 ( Act) must file an application for consideration by the Insurance Assessment and Licensing Committee (IALC). The IALC bulletin provides an overview of the IALC process.
IALC applications will be assessed in the context of the minimum criteria for registration set out in the Schedule contained in the Act.
Applications for licensing under the Act shall be sent via email to Authorisations_eApplications@bma.bm together with the appropriate documents as set out in the IALC bulletin. Completed Personal Declaration Forms must be enclosed with the IALC application in connection with all director, officer, and senior management appointments.
The business plan submitted by the applicant should address the matters set forth in the IALC Bulletin, in addition to the requirements discussed in the following documents, as applicable, which are accessible here on the BMA website:
- Insurance Code of Conduct
- Insurance Manager Code of Conduct
- Insurance Brokers and Insurance Agents Code of Conduct
- Insurance Marketplace Code of Conduct
- Insurance Sector Cyber Risk Management Code of Conduct
- Guidance Note - Special Purpose Insurers
- Information Bulletin - Fit and Proper Persons
- Fit and Proper for Intermediaries
- Role of Principal Representative
Statement of Principles
The Authority has published a Statement of Principles (SoP), which has been made pursuant to section 2A of the Act. The SoP relates to the Authority’s decisions on whether to register an entity, to cancel the registration of a registered entity, to impose conditions upon registration or to give certain directions to a registered entity. The SoP is of general application and seeks to take account of the wide diversity of registered entities that may be licensed under the Act, as well as relevant institutional and market developments.
The Multi-Licence System
Bermuda has a multi-licence system of regulation, which categorises licensees into general insurance company classes, long-term insurance company classes, special purpose insurer classes, innovative classes, collateralized insurer classes and intermediaries:
CLASS 1: A single-parent captive insurance company underwriting only the risks of the owners of the insurance company and affiliates of the owners.
Class 1 insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of premium and reservebased formulas, subject to a $120,000 floor.
CLASS 2: Multi-owner captives, which are defined as insurance companies owned by unrelated entities, provided that the captive underwrites only the risks of the owners and affiliates of the owners and/or risks related to or arising out of the business or operations of the owners and affiliates.
A Class 2 licence will also apply to single-parent and multi-owner captives writing no more than 20% of net premiums from risks that are not related to, or arising out of, the business or operations of their owners and affiliates.
Class 2 insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of premium and reserve-based formulas, subject to a $250,000 floor.
CLASS 3: Applies to insurers and reinsurers not included in Class 1, 2, 3A, 3B or 4. This includes structured reinsurers writing third-party business; insurers writing direct policies with third-party individuals; single-parent, group, association, agency or joint venture captives where more than 20% of net premiums written is from risks that are unrelated to the business of the owners.
Class 3 insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of premium and reserve-based formulas, subject to a $1 million floor.
CLASS 3A: Small commercial insurers whose percentage of unrelated business represents 50% or more of net premiums written or net loss and loss expense provisions and where the unrelated business net premiums are less than $50 million.
Class 3A insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) a premium-based formula, 3) a reserve-based formula and 4) a $1 million floor.
CLASS 3B: Large commercial insurers whose percentage of unrelated business represents 50% or more of net premiums written or net loss and loss expense provisions and where the unrelated business net premiums are more than $50 million.
Class 3B insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) a premium-based formula, 3) a reserve-based formula and 4) a $1 million floor.
CLASS 4: Insurers and reinsurers underwriting direct excess liability insurance and/or property catastrophe reinsurance risks.
Class 4 insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) a premium-based formula, 3) a reserve-based formula and 4) a $100 million floor.
SPECIAL PURPOSE INSURERS (SPI): In order for a company to receive consideration for registration as an SPI, it would have to meet the criteria discussed in the SPI Guidance. The SPI will be licensed as either restricted or unrestricted. A restricted SPI may conduct special purpose business with specific cedents approved by the Authority. While unrestricted SPIs may transact with any cedent, if the cedent is rated A- or higher, in terms of its financial strength, by AM Best or an equivalent rating from a rating agency recognised by the Authority.
COLLATERALIZED INSURER: means an insurer that carries on special purpose business, but is not a “Special Purpose Insurer”. Collateralized Insurers write business on a fully collateralized or fully funded basis.
CLASS IIGB: A body corporate who intends to carry on general business in an innovative manner (e.g., those intending to use digital assets or cryptocurrency for their insurance business).
LONG-TERM - CLASS A: A single-parent long-term captive insurance company underwriting only the long-term business risks of the owners of the insurance company and affiliates of the owners.
Class A insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from an asset-based formula subject to a $120,000 floor.
LONG-TERM - CLASS B: Multi-owner long-term captives, which are defined as long-term insurance companies owned by unrelated entities, provided that the captive underwrites only the long-term business risks of the owners and affiliates of the owners and/or risks related to or arising out of the business or operations of their owners and affiliates.
A Class B licence will also apply to single-parent and multi-owner long-term captives writing no more than 20% of net premiums from risks that are not related to, or arising out of, the business or operations of their owners and affiliates.
Class B insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from an asset-based formula, subject to a $250,000 a floor.
LONG-TERM - CLASS C: Long-term insurers and reinsurers with total assets of less than $250 million; and not registrable as a Class A or Class B insurer.
Class C insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) an asset-based formula and 3) a $500,000 floor.
LONG-TERM - CLASS D: Long-term insurers and reinsurers with total assets of $250 million or more, but less than $500 million; and not registrable as a Class A or Class B insurer.
Class D insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) an asset-based formula and 3) a $4,000,000 floor.
LONG-TERM - CLASS E: Long-term insurers and reinsurers with total assets of more than $500 million; and not registrable as a Class A or Class B insurer.
Class E insurers are required to maintain minimum capital and surplus equal to, or in excess of, an amount derived from the greater of 1) a risk-based capital model reflective of tail risks, 2) an asset-based formula and 3) an $8,000,000 floor.
INSURANCE MANAGER: Means a person who, not being an employee of any insurer, holds themselves out as a manager in relation to one or more insurers, whether or not the functions performed by them, as such, go beyond the keeping of insurance business accounts and records.
INSURANCE AGENT: A person who, with the authority of an insurer, acts on its behalf in relation to any or all of the following matters: the initiation and receipt of proposals, the issue of policies and the collection of premiums, being proposals, policies and premiums relating to insurance business.
INSURANCE BROKER: A person who arranges or places insurance business with insurers on behalf of prospective or existing policyholders.
INSURANCE MARKETPLACE PROVIDER: A person who operates a platform, of any type, established for the purpose of buying, selling or trading contracts of insurance
As required by the Act, the Authority maintains a register giving details of each licensee . This is available for inspection by members of the public in the public files at the Registrar of Companies.
INSURANCE REGULATORY SANDBOX (Sandbox): The Sandbox will allow companies to test new technologies and offer innovative products, services and delivery mechanisms to a limited number of policyholders/clients in a controlled environment and for a limited period of time. Having reviewed a company’s proposal, the BMA determines the legislative and regulatory requirements that will be modified for its duration within the Sandbox. This will be communicated to the company. The Sandbox includes the following options as license categories:
- IGB – a company aiming to carry on general business in an innovative and experimental manner
- ILT – a company aiming to carry on long-term business in an innovative and experimental manner
- Innovative intermediaries:
- IA – a registered person aiming to carry on the business of an insurance agent in an innovative and experimental manner;
- IB - a registered person aiming to carry on the business of an insurance broker in an innovative and experimental manner
- IM - a registered person aiming to carry on the business of an insurance manager in an innovative and experimental manner
- IMP - a registered person aiming to carry on the business of an insurance marketplace provider in an innovative and experimental manner
At the end of a successful Sandbox proof of concept, the company may graduate to an appropriate full licence. Depending on their operational maturity and readiness at the application stage, some entities may opt to bypass the Sandbox and apply directly for a full licence. Innovative insurers may be required to obtain a Digital Asset Business (DAB) licence if the activities to be conducted are in the scope of the DAB legislation.
INNOVATION HUB: While this is not a licence, the Innovation Hub promotes broader and structured dialogue, beyond the occasional queries, where an industry participant desires to work closely with the BMA and receive regulatory guidance on standards and expectations related to innovative insurance solutions. The dialogue may be with respect to activities or services that are either: 1) directly regulated by the Authority or; 2) although not directly regulated by the Authority, are offered to, and considered in the Authority's assessment of, regulated entities. In either case, an Innovation Hub participant may not perform live market testing or bind any business that would constitute a licensable activity under any of the financial acts regulated by the BMA.
You may view more information about the Insurance Regulatory Sandbox and Innovation Hub on the Authority’s website here.
Kindly direct all queries about insurance licensing matters to Licensing@bma.bm
