
BMA to ramp up long term insurance supervision in 2024
The Bermuda Monetary Authority will continue to ramp up its long term re/insurance supervisory team this year, the regulator said.
The BMA lost $3.53 said it lost $3.53 million in 2023, down from $5.45 million in the previous year.
It said in its annual report that the loss was driven by an increase in headcount from 235 employees in 2022 to 273 in 2023.
"The pace of growth will continue into the coming year, with the headcount expected to increase further as staffing levels in the insurance supervisory, data science and operational support areas increase to ensure ongoing alignment with growing regulatory and operational support needs," the BMA said. "This growth is driven by the organisation's pressing need for skilled technical and actuarial staff to supervise the long-term insurance sector."
The BMA said its total revenue increased by 8.8% year-on-year to $86.66 million, up from $79.65 million as supervisory and licensing fees rose, offsetting a drop in fines and penalties.
"Expenses increased by 21.54% to $90.19 million, up from $74.20 million in the prior year. The increase is
mainly due to the $10.09 million increase in salaries and employee benefits due to increased headcount," the BMA said.
"General expenses increased by $3.91 million, mainly due to increased losses from the retirement of property and equipment and intangibles, premises and office expenses, recruitment and repatriation and conferences, seminars, education and training.
"Professional fees increased by $2.80 million, mainly due to increased legal and consultancy expenses. These were offset by decreased circulation notes and coin expenses of $1.13 million."
The BMA said the organisation's increase in headcount "was critical to support the BMA’s rapidly expanding supervisory remit across numerous sectors".
It added: "The organisation’s increasing need for highly skilled technical staff in the areas of financial services
regulation, actuarial science, risk analytics and legal services has largely continued to drive the increase in
resourcing demands."
BMA chief executive officer Craig Swan said the Authority had "bolstered its prudential architecture to acknowledge the rapid expansion of the long-term insurance sector, necessitating more complex and technical oversight".
He added: "The proposed framework enhancements are designed to keep the regime agile and equipped to address the evolving nature of long-term (life and annuity) insurance. Additionally, a white paper, The Supervision and Regulation of Private Equity Insurers, published in December 2023, outlined constructive methods regulators could take to uphold the effective supervision of private equity and alternative asset manager-owned and/or supported insurers."
Swan said the BMA had also focused on the potential impact of climate change on re/insurers.
He said a 2022 BMA report showed Bermuda insurers were more exposed to the Atlantic Hurricane peril than any other peril, with gross average modelled losses across all companies ranging from $832 million for 1 in 50-year events to up to $1.59 billion for 1 in 1,000-year events.
He added: "However, the stress tests also revealed that the Bermuda market is resilient to potential adverse impacts, including financial market disruptions, catastrophic events and other underwriting loss scenarios.
"Adopting a social and environmentally conscious mindset will become even more essential as companies increasingly shoulder a larger proportion of the climate change risk."
He said in early 2023 the BMA released a guidance note, Management of Climate Risks for Insurers to Embed Climate Change into their Corporate Governance Framework, which will require insurers "to address their current policies and
implement an action plan to progress towards a fully established climate change risk framework by the end of 2025".
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