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Bermuda is the world’s largest captive domicile with over 700 active captive licences on its register generating approximately US$54 billion in annual gross written premiums. Having formed the first modern captive in 1962, Bermuda still maintains its global lead. The jurisdiction has earned international credibility as a leading global insurance and reinsurance market over the past 40 years and is among the world’s top three insurance and reinsurance markets, along with London and New York. Captive insurers represent approximately 64 per cent of the Bermuda Monetary Authority’s register of licensed insurers.
The widely-respected Bermuda Monetary Authority (BMA) acts as gatekeeper to Bermuda’s insurance and reinsurance markets. Every application to incorporate and license a captive insurance company undergoes a thorough review.
The BMA’s ‘proportionality’ approach ensures firm but sensible regulation to international standards in regulating captive insurers. This risk-based regulatory approach recognises, among other things, the more limited risks that captive insurers pose. The BMA does not apply a Solvency II-type regime to captives and therefore the supervisory regime for captives is less onerous than that applicable to commercial insurers. Bermuda was officially granted Solvency II third-country equivalency as of 24 March 2016 by the European Union.
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The Bermuda Captive Insurance Market
This article was originally published in IFC Economic Report.