The National Association of Insurance Commissioners (NAIC) has granted Bermuda reciprocal jurisdiction status, effective January 1, 2020.
Outside of EU jurisdictions, reciprocal jurisdiction status can only be achieved by first gaining the prerequisite qualified jurisdiction status, and recognising US state authority in group supervision and group capital.
While revising the credit for reinsurance model law and regulations this year, NAIC created the reciprocal jurisdiction status to increase efficiencies for cross-border operations of Bermudian re/insurers in the US market. It creates consistency between the model law and regulations, and the provisions contained in the covered agreements between the US and the EU and UK, giving Bermudian re/insurers the same eligibility for zero collateral relief.
NAIC has also reaffirmed Bermuda as a qualified jurisdiction, following the completion of its five-year re-evaluation, acknowledging it meets the standards of, and achieves similar supervisory outcomes of, the US regulatory system for re/insurers. It is one of only seven jurisdictions with the qualified jurisdiction status.
Bermuda was placed on NAIC’s first List of qualified jurisdictions on January 1, 2015, alongside France, Germany, Ireland, Japan, Switzerland and the UK. It has maintained its status on the list since 2015. The renewed qualified jurisdiction status maintains Bermuda-domiciled re/insurer eligibility for reduced re/insurance collateral requirements, under NAIC’s credit for reinsurance model law and regulations. The status is applicable to re/insurers licenced as Class 3A, Class 3B and Class 4, and Long-Term insurers of Class C, Class D and Class E.
The move solidifies Bermuda’s position as a major re/insurance trading partner of the US. Over the last two decades, Bermuda re/insurers have paid in excess of $200 billion to settle US losses, consistently offering capacity provisioning for catastrophic events.
Craig Swan, the BMA’s managing director of supervision said: “Bermuda’s approval as a reciprocal jurisdiction further cements the close economic relationship between our jurisdictions as Bermuda re/insurers continue to play a vital role in supporting the US economy by providing the financial protection and support needed when there is a loss.”
National Association of Insurance Commissioners, NAIC, Bermuda Monetary Authority, Craig Swan