Bermuda Insurance Companies Overview and Key Features

Bermuda is home to a thriving insurance industry, with many companies offering a range of products and services. The island's favorable business environment and highly developed financial services sector make it an attractive location for insurance companies.

Bermuda's insurance companies are known for their expertise in property and casualty insurance, particularly in the areas of marine and aviation insurance. This is due in part to the island's strategic location in the North Atlantic, which makes it an ideal hub for international shipping and air travel.

Many Bermuda-based insurance companies are publicly traded, with some of the largest ones being listed on the New York Stock Exchange. This provides investors with the opportunity to buy and sell shares, making it easier to access the insurance market.

Some of the key features of Bermuda insurance companies include their financial stability, regulatory oversight, and expertise in specialized areas of insurance.

Reinsurance is a vital part of the insurance industry, allowing insurance companies to manage their risk and keep prices competitive.

Insurance companies buy reinsurance to protect their capital and expand their coverage capacity. This helps keep the market stable and allows more insurers to compete in markets.

Reinsurance works to keep insurance premiums low by allowing more insurers to compete in markets. By absorbing risk around the world, reinsurers spread and diversify risk so that insurers don’t become over exposed.

This means consumers get more insurance choices at lower prices.

Bermuda is home to a thriving insurance industry, with many top-tier companies calling the island nation home.

These companies are drawn to Bermuda's favorable business environment and highly developed regulatory framework.

Bermuda's insurance industry is characterized by a strong presence of reinsurers, which provide reinsurance to other insurers.

The island nation has a well-established and respected regulatory body, the Bermuda Monetary Authority (BMA), which oversees the insurance industry.

The BMA ensures that insurance companies operating in Bermuda meet strict capital and solvency requirements.

Bermuda is home to a vibrant community of international insurers and reinsurers. The Bermuda International Long Term Insurers and Reinsurers (BILTIR) is a key player in this industry.

BILTIR hosts an annual life and annuity conference at the Fairmont Southampton Princess Hotel. Industry leaders from Europe and North America join Bermuda-based executives at this event.

The conference focused on the EU Solvency II regulations, which came into force in 2016, and Bermuda's ongoing work to comply with these new rules.

The history of the local insurance industry in Bermuda dates back to the 18th century.

The first insurance company in Bermuda was established in 1752, with the formation of the Royal Exchange Assurance Corporation.

In the early 19th century, the industry experienced significant growth, with the establishment of several other insurance companies, including the Phoenix Assurance Company in 1782 and the North American Fire Insurance Company in 1794.

The industry continued to expand throughout the 19th and 20th centuries, with the introduction of new types of insurance policies and the establishment of the Bermuda Insurance Association in 1926.

By the mid-20th century, Bermuda had established itself as a major center for the insurance industry, with many international insurance companies setting up operations on the island.

Today, Bermuda is home to over 500 insurance companies and is considered one of the world's leading insurance hubs.

Bermuda is the principal domicile of captive insurance companies, with over 10,000 captives worldwide.

Over 65% of captives in Bermuda are owned by American interests, making it a hub for captive insurance companies.

The Cayman Islands, Vermont, Guernsey, and British Virgin Islands are also notable jurisdictions with industry growth.

Bermuda has a variety of captive categories, including Agency, Association, Captive of Insurer, and more.

A Captive of Insurer is a single parent captive owned by a professional insurer or reinsurer.

A Finite Insurer and/or Reinsurer is a company writing unrelated risks with clearly defined aggregate limits and premiums reflecting anticipated investment income.

Bermuda also has a Health Care Captive, owned by a hospital or health maintenance organization, writing the risks of its owners and/or affiliates.

The Multi Owner Captive is owned by two or more unrelated persons or organizations, writing the risks of its owners and/or affiliates.

A Pure Captive is a single parent captive writing only the risks of its owner and/or affiliates.

Rent-a-Captive is a type of captive owned by unrelated persons or organizations, providing captive facilities to others for a fee.

Bermuda is home to a thriving insurance industry, and one of the key organizations that represents the long-term insurance sector is the International Long Term Insurers and Reinsurers (BILTIR). BILTIR hosts an annual life and annuity conference at the Fairmont Southampton Princess Hotel.

Fifteen of the world's top 50 reinsurers are based in Bermuda, a testament to the island's reputation as a hub for the insurance industry. The industry chiefs from Europe and North America regularly join Bermuda-based executives at BILTIR's annual conference.

The conference has featured presentations from industry leaders, including the president of the Society of Actuaries, which has more than 25,000 members in 78 countries.

The Association of Bermuda Insurers & Reinsurers (ABIR) is led by John M. Huff, who serves as both the President and CEO. He brings a wealth of experience to the role, having spent his entire professional career in the insurance sector.

Huff has held various positions, including President of the National Association of Insurance Commissioners (NAIC) and Director of the Missouri Department of Insurance. He was also the first state insurance commissioner appointed to serve on the U.S. Financial Stability Oversight Council (FSOC).

John Huff's global expertise in the insurance industry spans the United States, Bermuda, the United Kingdom, Continental Europe, and Asia markets. His knowledge of public policy, regulatory, legal, financial, and operational challenges is unparalleled.

A captive insurance company is a type of insurance company that is owned and controlled by a parent company.

Captive insurance companies are often used by large corporations to self-insure and manage their own risk.

They can provide a cost-effective alternative to traditional insurance, as the parent company can retain profits that would otherwise be paid to an external insurer.

Captive insurance companies can also offer more flexible policy terms and conditions than traditional insurers.

A key benefit of captive insurance is that it can help companies manage their risk and protect their assets.

Captive insurance companies can be set up in various jurisdictions, including Bermuda, the Cayman Islands, and Ireland.

The parent company typically has a significant amount of control over the captive insurance company, which can be beneficial for managing risk and making decisions.

John M. Huff is the President and CEO of the Association of Bermuda Insurers & Reinsurers (ABIR). He directs the association’s worldwide public policy, regulatory, advocacy and education initiatives.

Huff has spent his entire professional career in the insurance sector, with a keen understanding of the public policy, regulatory, legal, financial and operational challenges that insurance and reinsurance companies face.

He previously served as the 2016 President of the National Association of Insurance Commissioners (NAIC) and as Director of the Missouri Department of Insurance, a position he held for eight years.

Huff was the first state insurance commissioner appointed to serve on the U.S. Financial Stability Oversight Council (FSOC), established by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

He earned his JD from Washington University School of Law and holds an MBA from St. Louis University and a BSBA from Southeast Missouri State University.

Huff brings a global perspective to his role, with experience working in the United States, United Kingdom, Switzerland, and other international markets.

The Director of Policy & Regulation plays a crucial role in ABIR's work, spearheading the public policy interests of Bermuda's international insurers and reinsurers.

Anderson was appointed to this position in July 2024, bringing 23 years of experience in the public and private sectors to the table.

He will lead ABIR's public outreach agenda and manage the Hamilton office, serving as the corporate secretary.

Anderson's extensive experience includes regulatory and supervisory work at the Bermuda Monetary Authority and leadership roles with the Government of Bermuda.

As a consultant to the Government of Bermuda, he worked on implementing Bermuda's Corporate Income Tax (CIT) for the Ministry of Finance.

Anderson's work on the CIT project involved coordinating the project team and overseeing policy, legislative, operations, communications, and financial matters.

Bermuda insurance companies offer a unique combination of financial stability and expertise in the industry.

They are often backed by strong capital bases, with many having a Moody's rating of Aa3 or higher.

This financial stability is a key advantage for policyholders, providing peace of mind and confidence in the company's ability to pay claims.

Additionally, Bermuda insurance companies have a strong reputation for expertise in areas such as reinsurance and catastrophe risk management.

They have a deep understanding of these complex risks, which enables them to provide innovative and effective solutions for clients.

Their expertise is also reflected in their ability to navigate complex regulatory environments, ensuring compliance with all relevant laws and regulations.

Kind Premium Benefits offer a range of advantages for policyholders.

Insurers in most countries can't accept premium payments in foreign currencies, but a good Bermuda company can structure a policy to allow payment in kind, meaning assets other than cash. This provides flexibility for clients who want to keep their assets intact.

Payment in kind can take the form of securities, business interests, or real estate, both earning and not earning. This is a significant advantage for clients who want to diversify their assets without liquidating them.

A Bermuda insurance company's ability to comply with insurance and tax regulations in the policyholder's country can provide significant benefits. For example, a USA domiciled policyholder can be provided with a policy that is federal tax compliant yet not subject to individual state regulatory issues.

Some countries offer benefits for the owners and beneficiaries of insurance policies, such as deductibility of premiums for tax purposes or wrapping investment-oriented products that expand the tax deductibility of premiums paid.

Policies acquired through a good Bermuda based international company can include benefits such as deductibility or exclusion from estate taxes when benefits are paid.

Insurance regulation can be a significant constraint on costs.

Administrative expenses, capital reserve costs, and company taxes all contribute to these costs.

The domicile, tax, and regulatory environment of an insurance company can vary greatly, affecting costs and efficiencies.

Some international insurance companies, such as those based in Bermuda, are structured to take advantage of economies of scale, which can lead to lower costs.

In Bermuda, the use of separate accounts can isolate policyholders from creditors and litigants, providing lower capital requirements for the company and higher returns or better protection for the policyholder.

This can also lead to increased costs in established domiciles, making Bermuda a more cost-effective option for some companies.

Bermuda's insurance industry is regulated by the Companies and Insurance Acts, which apply to all companies in the industry.

The Companies Act regulates the activity of companies incorporated or licensed in Bermuda, including insurance-related companies. This ensures that all companies in the industry follow the same rules and guidelines.

The Insurance Act is the basis for regulation of the insurance industry, both in the domestic Bermuda market and in the international arena when it affects Bermuda-based and/or Bermuda-incorporated insurance companies. This act was introduced to protect Bermuda's image and increase its worldwide credibility as an international center for insurance.

In 2001, the new Bermuda Government position of Supervisor of Insurance was created, with full responsibility to oversee the licensing and regulation of Bermuda-based insurance companies. This position plays a crucial role in ensuring that all insurance companies in Bermuda operate fairly and transparently.

To operate in Bermuda, insurance companies must have a physical presence and office in the country, and staff who are not Bermudian must have an approved, current Work Permit to work for that office. This ensures that all companies contribute to the local economy and adhere to local regulations.

Bermuda insurance companies are known for their expertise in managing financial risk. They offer a range of financial services, including captive insurance and reinsurance.

One of the key benefits of working with a Bermuda insurance company is their ability to provide customized financial solutions. This is made possible by their knowledge of the global insurance market.

Bermuda insurance companies are also highly regulated, which helps to ensure that they operate with integrity and transparency. This is reflected in their adherence to international financial standards.

Their risk management expertise is built on a deep understanding of the insurance industry, which allows them to identify and mitigate potential risks.

In Bermuda, the minimum paid-up capital for general business insurance is $120,000, while long-term business requires a minimum of $250,000.

Insurance companies must maintain liquid assets, known as relevant assets, equal to at least 75% of their general business liabilities.

The Bermuda Monetary Authority (BMA) reviews insurance applications and accepts or declines them based on their merits or demerits.

For general business, the minimum solvency margin is $120,000, or 20% of net income, or $1,200,000 plus 10% of net premiums written greater than $6 million, whichever is higher.

Bermuda's insurers have various classes of capital and surplus, with specific reporting requirements and solvency margins.

Insurance companies must file an annual Statutory Financial Return with the Registrar of Companies, which includes an Auditor's Report and actuarial certification in certain situations.

The loss reserve for general business is 10%, while for long-term business, it is $250,000.

For composite business, the solvency margin is a combination of the requirements for general business and long-term business.

Insurance companies must maintain relevant assets, excluding real estate investments and unquoted equity securities, to meet their solvency requirements.

Liberty Mutual Bermuda is the marketing name for Liberty Specialty Markets Agency Limited and Liberty Specialty Markets Bermuda Limited.

These two entities, LSMA and LSMB, are key players in the financial lines industry, providing specialized insurance solutions to clients.

Their expertise spans various financial lines, allowing them to offer tailored coverage options to meet diverse client needs.

This level of specialization enables them to provide more effective risk management strategies for their clients.

In Bermuda, insurance policies and their underlying assets are protected from creditors, except under certain circumstances. This means that policyholders and beneficiaries can be assured that the proceeds of the policies can be passed on intact.

The Bermuda Private Act offers a safe haven for policyholders and beneficiaries, shielding them from frivolous lawsuits. This provides peace of mind for those who rely on insurance policies to protect their assets.

The regulatory system in Bermuda is a collaborative effort between the government and the industry, ensuring that insurance businesses operate with transparency and accountability.

Regulatory Compliance is a crucial aspect of the insurance industry, and Bermuda's system is no exception. The Bermuda Government and the industry work together to regulate the insurance business, with the Insurance Advisory Committee playing a key role.

This committee is appointed by the Minister of Finance and chaired by a member of the industry. Other members represent various stakeholders, including underwriters, brokers, managers, accountants, actuaries, the domestic market, the Insurers Admissions Committee, and consultants.

The Bermuda Monetary Authority took over insurance regulation from January 1, 2002. This move brought a new level of oversight and standardization to the industry.

In some jurisdictions, the mere threat of litigation can be an expensive exercise due to the numerous and overreaching remedies available to plaintiffs.

Pro plaintiff onshore jurisdictions have opened a floodgate of litigation by providing these remedies, often including the invasion of insurance policies to satisfy claims.

Under a Bermuda Private Act, insurance policies and their underlying assets cannot be seized by any creditor of the policyholder or the beneficiary except under certain circumstances.

Any disputes arising from this protection must be physically adjudicated in Bermuda, giving policyholders and beneficiaries assurance that the proceeds of the policies can be passed on intact.

Insurance policies are generally exempt from disclosure because they're recognized as a contractually based agreement between the individual and an insurance company.

Many jurisdictions require residents and citizens to report the existence of foreign bank and financial accounts, but not insurance policies, which are viewed as contracts under statutory law.

The invasiveness of these requirements is obvious, and failure to report can be a crime with significant penalties.

Insurance policies can provide additional confidentiality and privacy through a "Private Act" Confidentiality clause.

Bermuda law requires withholding all information about policyholders or policies, regardless of the stature of the person questioning.

Disputes over disclosure are physically adjudicated in Bermuda under Bermuda law.

Bermuda insurance companies offer a range of specialized insurance options to cater to unique needs.

One such option is yacht insurance, which is a must-have for boat owners in Bermuda, where a significant portion of the population owns a yacht.

Bermuda's unique geography makes it prone to hurricanes, and yacht insurance policies often include coverage for damage caused by these storms.

Some insurance companies in Bermuda offer marine cargo insurance, which protects against loss or damage to goods being transported by sea.

This type of insurance is particularly important for businesses that rely on international trade, as it can help mitigate financial losses in the event of a cargo loss or damage.

Bermuda's insurance companies also offer aviation insurance, which covers aircraft and their operators against various risks, including accidents, natural disasters, and cyber attacks.

Aviation insurance is essential for individuals and businesses that own or operate aircraft, as it can provide financial protection in the event of an unexpected incident.

Insurance policies are generally exempt from disclosure because they're recognized as a contractually based agreement between the individual and an insurance company, not as a financial account.

This exemption is a significant advantage of choosing a Bermuda insurance company, as it provides an extra layer of confidentiality and privacy for policyholders.

In Bermuda, the government requires insurance companies to withhold all information relating to policyholders or policies, regardless of the stature of the person doing the questioning.

This means that even if you're asked to disclose information about your policy, you don't have to, and any disputes over disclosure will be physically adjudicated in Bermuda under Bermuda law.

An appropriate insurance policy can also give you additional confidentiality and privacy through a "Private Act" Confidentiality clause.

This clause is a powerful tool for maintaining your anonymity and protecting your personal information.

The Bermuda insurance market is a significant player in the global insurance industry. Bermuda has a long history of insurance companies, with many established in the late 19th and early 20th centuries.

Bermuda's unique combination of favorable tax laws, highly developed financial infrastructure, and experienced workforce has made it an attractive location for insurance companies. The island's location in the middle of the Atlantic Ocean also provides a strategic advantage for companies looking to operate globally.

Many Bermuda insurance companies are involved in the reinsurance market, providing coverage to other insurance companies. This is a significant aspect of the Bermuda insurance market, with some companies specializing in reinsurance.

The Bermuda insurance market is heavily regulated, with the Bermuda Monetary Authority (BMA) overseeing the industry. The BMA is responsible for ensuring that insurance companies operating in Bermuda are solvent and compliant with regulatory requirements.