Parametrics on the horizon: BMA’s next leap in ILS innovation

Bermuda’s position at the centre of the global ILS market has never been accidental — it’s been built on a regulatory framework that evolves in step with innovation. Now, the Bermuda Monetary Authority (BMA) is preparing its next major step: a new class for parametric insurance structures, designed to push the frontier of climate-linked risk transfer.

Speaking at Convergence 2025, Taijaun Talbot (pictured left), assistant director of supervision (Insurance) at the BMA explained: “Last year, we were in the research phase for a new special purpose insurer class which will look at the use of parametric triggers. We’re now in an advanced stage with internal approvals and will be going out to consultation shortly to implement this new class.”

Parametric covers — where payouts are linked to measurable events such as wind speed, rainfall or earthquake intensity — have long been heralded as a way to close the protection gap in climate-vulnerable regions. The BMA’s new class aims to give those structures a defined home within its ILS framework.

“We see the potential for parametric covers to help fill the protection gap that exists,” Talbot said. “We’ve had success in our Special Purpose Insurer (SPI) class — it’s a low-risk class due to its fully collateralised nature — so we want to leverage that success and give parametrics a space to evolve.”

The regulator is building this new class from the foundations of the Special Purpose Insurances (SPI) framework: “It will be fully collateralised, with contractual certainty and sophisticated participants,” he noted. “But we will look at some expanded features for parametrics such as the use of swaps, derivatives, basis risk and sophistication of various cedants.”

The announcement underscores Bermuda’s long-held reputation for regulatory agility. The island’s ability to balance speed-to-market with oversight has been key to maintaining its leadership. “We’ve been regulating ILS for 16 years now,” he said. “That experience — being a part of the evolution and developing internal expertise — is what allows us to keep pace.”

The BMA’s consultative approach also plays a major role. “We do consultation with the market,” he explained. “Potential registrants can come and speak to us, and this has helped build up expertise internally. It informs a great deal of our enhancements to the framework.”

That blend of pragmatism and foresight has helped Bermuda stay far ahead of other hubs now showing interest in ILS. “We like to be solution-based,” he said. “We understand that the market has evolved and will continue to evolve — so we aim to be proactive and forward-looking, right alongside it.”

With a dedicated parametric class on the horizon, Bermuda is once again proving why it remains the laboratory for the world’s ILS innovation — combining the steady hand of regulatory experience with an open door to the next generation of risk transfer.

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