Feb 2026
On 21 January 2026, the Bermuda Monetary Authority (BMA) published a consultation paper to introduce a proposed new class of Special Purpose Insurer (SPI), the Parametric Special Purpose Insurer (PSPI). The proposal reflects the BMA’s continued focus on supporting innovation within Bermuda’s insurance-linked securities (ILS) market, while ensuring that the regulatory framework remains robust and aligned with international standards.
The possibility of this new class has been under consideration by the BMA for the past couple of years. With the continued growth of the ILS industry, the BMA is looking to ensure that Bermuda’s regulatory framework continues to address the wide variety of structures.
While still in the consultation phase, and therefore still subject to change, we note the following proposed key features:
- The PSPI class is intended to enhance the existing SPI framework and is specifically designed to allow for parametric business, including swaps and derivatives, by using the well-established fully collateralised framework.
- Consistent with SPIs, PSPIs will be permitted to carry on either a restricted basis (with specific named cedant(s)) or unrestricted basis (with unnamed but sophisticated and highly rated cedants).
- For PSPIs, the BMA is considering expanding the type of cedants to allow for additional types of sophisticated participants, such as qualified regional and national corporates and entities that can demonstrate a mature risk function and experienced insurance buyers.
- Given the critical role to be played by third parties in validating risks for a parametric programme, there will be an emphasis on ensuring that all external parties are appropriately sophisticated.
The BMA has indicated that it intends to amend the Insurance Act 1978 to incorporate this new class in Q2 2026. Feedback on the consultation paper is requested to be provided by 27 February 2026.
If you have any questions regarding the consultation paper, please contact your usual Conyers contact to discuss.