Insurance

Brian Holdipp

The Economic Substance Act 2018 (the “Economic Substance Act”) was tabled on 7 December 2018.

Background In November 2017, the Government of Bermuda made a commitment to the Code of Conduct Group (Business Taxation) (the “COCG”) of the Council of the EU to address concerns relating to economic substance. Bermuda agreed to pass legislation to implement any appropriate changes by 31 December 2018 to avoid being put on an EU list of non-cooperative tax jurisdictions.

Jeremy Leese
Setting aside the effects on the UK economy, which are already being felt with political turmoil, the fall of the pound, billions being slashed from UK stocks worldwide and the potential break-up of the United Kingdom itself, one little examined effect is how its overseas dependent territories, of which Bermuda is one of the largest, would fare in the post-Brexit world, particularly in their relationship with the EU that the UK is leaving behind.

Jean-Paul Dyer
Bermuda has moved closer to equivalence under Solvency II (Directive 2009/138/EC) and the retention of EU market access for Bermuda commercial (re)insurers. The encouraging news follows the recent consultation paper published by the European Insurance and Occupational Pensions Authority (EIOPA) which is focused on the equivalence assessment of the Bermuda supervisory system (EIOPA-CP-14/042). EIOPA has endorsed certain key aspects of Bermuda’s regulatory and supervisory regime subject to certain caveats. A notable area of required improvement includes those rules applicable to the supervision of commercial life (re)insurers. It is, however, acknowledged that the BMA has implemented, or plans to implement, rule changes to address these concerns. EIOPA’s advice is limited to the commercial class of (re)insurer being 3A, 3B, 4, C, D and E and (re)insurance groups. This is significant as it preserves the Bermuda Monetary Authority’s (BMA) risk based and proportionate approach to the regulation of the commercial market as distinct from its captive market.