FOREWORD

STRENGTH, DIVERSITY AND INNOVATION

Bermuda is a jurisdiction that prides itself on its regulatory excellence, which is what separates us from many other jurisdictions, the Hon David Burt, JP, MP, Premier of Bermuda, writes.

“This cooperation between stakeholders ensures that we maintain our tireless commitment to adhering to the highest international standards in regulation.”
The Hon David Burt, Premier of Bermuda

We are a small country by population and size, but we have consistently proven that these factors do not limit us to small, local businesses. Bermuda has continually shown that with the proper regulatory framework, investment in human capital, political and economic stability, and the willingness to innovate, even geographically small countries can play an essential role in international business and the global market.

Bermuda is home to companies from the US, Europe, and even Hong Kong. We are proud of that geographical diversification and the broad range of products these businesses offer their clients.

Our financial services platform maintains four principles: brand, employment, diversification and sustainability. Brand refers to the high-quality, well-known financial services corporations domiciled on our shores. Employment speaks to the continuous upskilling of Bermuda’s workforce to meet market needs while ensuring the long-term creation of job opportunities within our economy.

Diversification highlights the varied nature of business within our economy, the products local companies offer and their origin. And sustainability speaks to our ability to expand and diversify our economy with limited impact on current economic activity.

Thanks to this four-pronged platform and our work to continually act with integrity, we have become a leading financial centre and leading re/insurance hub. Every aspect of our financial services policy objectives emphasises that a competitive, efficient, and stable financial services industry operating with integrity is in Bermuda’s best interests.

Bermuda is one of only two non-EU jurisdictions granted full equivalence under the Solvency II Directive for the insurance industry. Our insurance market has developed unparalleled expertise in areas such as property catastrophe insurance and reinsurance, protecting the world’s most vulnerable populations from climate perils, contributing more than $65 billion to US catastrophe losses between 2001 and 2017. Today Bermuda is the one of the single most crucial property and catastrophe market in the world.

Fourteen of the world’s top 50 reinsurers hold licences on the Island. Since 1997, Bermuda’s commercial re/insurers have paid out over half a trillion dollars to policyholders and cedants in the US, EU, and the UK. Our re/insurance industry has grown to include life/long-term and annuity insurance within the last decade. These companies have not only found a home in Bermuda, they have experienced tremendous growth.

“Our strength and our diversity lie within our innovation culture.”

Key stakeholders

In addition to re/insurance, Bermuda has remained a leading jurisdiction for trusts, family offices and fiduciary services for over 100 years. We are home to the big four accounting firms, globally recognised trustees, law firms, and lawyers who serve a broad range of international business and high-net-worth clients.

Our strength and our diversity lie within our innovation culture. This culture has been established through the long and cooperative relationship between our three key stakeholders: the industry, the regulator, and the legislators.

The industry provides inspiration and innovation for new business models/products/services. Our sole financial services regulator, the Bermuda Monetary Authority (BMA), provides confidence and trust that the innovations do not destabilise the existing financial system. The legislators facilitate collaboration between the industry and regulators, ensuring a swift transition from innovation to trusted best practices for the industry.

This cooperation between stakeholders ensures that we maintain our tireless commitment to adhering to the highest international standards in regulation, transparency, and compliance with global tax standards. Bermuda scored in the top 6 on its recent Global Anti-Money Laundering assessment. As a result, we’ve built a stable of reputable companies keen to leverage our regulatory framework to showcase to institutional and retail customers that they have competent oversight and are managing the risks. This oversight allows us to continue to innovate.

In 2018, the BMA rolled out a comprehensive regulatory framework which became the Digital Assets and Businesses Act 2018 (DABA), making us the first country to enact comprehensive legislation and regulation for digital assets. Since that time, Bermuda has grown into a recognised leader in the fintech and digital assets space, with 15 fully licensed digital asset companies and seven innovative insurer general businesses licensed by the BMA, including the largest insurer of digital assets in the world.

“The world must prepare for the environmental and financial implications and risks that climate change has already begun to impose.”

Focus on climate risk

Our understanding of the future of business does not stop at fintech. As a country, we are also well aware of, and impacted by, the growing threat of climate change. Climate is undoubtedly the most important topic of our time. It is an issue that impacts every person around the globe. The world must prepare for the environmental and financial implications and risks that climate change has already begun to impose.

Bermuda aims to become the world’s climate risk capital just as we have become the global capital of natural catastrophe risk protection with tropical storms, wildfire, floods and other climate-driven insured risks. We are confident that we can play a central role in helping high-risk regions bolster their financial resilience to the rising tide of climate peril and play a leading role in climate risk finance.

The BMA is actively increasing its expertise in climate risk and announced the creation of an innovation and environmental, social and corporate governance subject matter team in April 2021 to increase its focus on climate change matters with the introduction of a regulatory and supervisory team specialising in the licensing and supervision of innovative business model proposals to address climate change risk and the associated protection gap. The team will work with climate change risk solution service providers to the financial services sectors wishing to participate in the BMA’s innovation hub.

In June, Bermuda received the highest possible score for governance by Moody’s Investors Service, which highlighted the government’s fiscal and economic policies as key to maintaining Bermuda’s resilience during very difficult times globally.

This independent observation of our economy further highlights that Bermuda continues to head in the right direction. We will continue to welcome high-quality businesses from various sectors to come and innovate in an environment that encourages them to do so. Whether in traditional re/insurance, or new sectors of cyber and climate, digital assets, insurtech or other financial services Bermuda will provide businesses with the support needed and provide the ecosystem in which they can grow and develop.

Image courtesy of Shutterstock / Mystic Stock Photography