BMA’s new parametric plan to target climate and cyber protection gap
The Bermuda Monetary Authority (BMA), Bermuda’s independent financial regulator, has confirmed plans to enhance the jurisdiction’s market-leading insurance-linked securities (ILS) framework to assist in bridging the protection gap.
Building on its special purpose insurer (SPI) regime, the BMA said it will issue a consultation paper in Q4 2025 outlining a proposed SPI framework specifically designed for parametric products. The initiative aims to strengthen Bermuda’s role as a hub for innovative risk transfer solutions and provide faster, more efficient coverage for policyholders facing climate and emerging risks.
The move comes as natural catastrophe risks grow in scale and frequency worldwide, increasing the financial impact of uninsured losses. At the same time, new exposures, such as cyber threats, are widening the gap between insured and economic losses.
According to the regulator, a “fit-for-purpose” framework for parametric insurance could play a pivotal role in closing that gap. Unlike traditional indemnity products, parametric insurance offers faster claims payments based on pre-agreed triggers, helping policyholders recover quickly after loss events.
The BMA said the development of a robust parametric insurance market would not only enhance resilience but also reinforce Bermuda’s position as a centre of excellence for alternative risk transfer.
“A meaningful parametric market offers policyholders the potential to bridge gaps left by traditional indemnity insurance, while benefiting from expedited claims and pay-out processes that can strengthen their resilience after loss events,” the authority said.
As climate-driven risks and emerging threats continue to evolve, the regulator reaffirmed its commitment to innovation and resilience, maintaining that its credible and proven regulatory environment will continue to support Bermuda’s leadership in the global re/insurance sector.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
