Laura Hersey provides an examination of how important Insolvency II equivalency is to Bermuda, while still protecting the commercial viability of its Captive Insurance sector
Looking to the Future
Bermuda has long been the world’s captive insurance capital, as well as a reinsurance giant, making it a leading centre for all means of innovative risk transfer. As a premier domicile for the international financial services industry, quality service and integrity continue to be key to Bermuda’s success.
Bermuda has grown to become a leading jurisdiction for captives, insurance and reinsurance companies as well as other financial service industries. Bermuda was the innovator of the captive model and has long been the industry leader.
International ratings agencies continue to show confidence in Bermuda, with Fitch Ratings Agency affirming our AA+ credit rating at the end of 2010. Fitch pointed to our strong institutions, an extremely high per capita income, sustained sizeable current account surpluses and a low public debt burden compared with our peers.
Our progressive regulatory environment is matched by the supporting service industries available on island, including human resources and recruiting, legal, accounting and auditing, world class conference facilities and of course our strong banking sector.
In addition Bermuda boasts one of the world’s largest offshore, fully electronic securities markets, the Bermuda Stock Exchange.
Bermuda maintains an unparalleled reputation, enjoying recognition by the OECD, the International Monetary Fund and other international bodies as having transparency and standards that match those of other major developed countries. Bermuda is also a member of the International Organization of Securities Commissions (IOSCO) and is widely regarded as one of the highest quality offshore jurisdictions.
In 2000, Bermuda was a frontrunner in endorsing the internationally agreed standard for the exchange of information, when it affirmed its long-standing position that it does not adopt or promote measures that have been characterised as harmful, such as legislating bank secrecy or embedding in legislation similar measures that prevent disclosure of information. In 2009, Bermuda was the first country to ascend to the ‘white list’ after its compilation by the G20 during its London Summit on April 2, 2009, coincident with Bermuda’s signing its 12th TIEA on June 8, 2009, with the Netherlands.
In recognition of Bermuda’s significant and proactive progress Bermuda was elected a vice chair of the Steering Group of the new Global Forum on Transparency and Exchange of Information For Tax Purposes, held in Mexico City in September, 2009.
As a Vice-Chair of the Steering Group we contribute actively to efforts to advance the Global Forum’s mandate while at the same time continuing to ensure that the perspective of small jurisdictions is considered, with issues and concerns particular to the Caribbean countries being of special importance.
Finally, Bermuda also extended the Global Forum’s invitation for CARICOM to become an observer member of the OECD Global Forum. We were pleased the CARICOM office attended the Global Forum in Bermuda in May 2011.
Bermuda continues to negotiate and conclude TIEAs and other agreements relating to taxation that provide for the exchange of information on tax matters to the OECD standard. To date, Bermuda has signed 28 agreements for the exchange of information on tax matters, which includes TIEAs with six of the G7 industrialised economies.
Bermuda has participated in the peer review process by both contributing assessors, trainers, and by also being in the first round of those jurisdictions peer-reviewed. At its September 2010 meeting, the Global Forum reviewed and ratified Bermuda’s Phase 1 Peer Review Report, with the determinations that Bermuda met all elements, with some recommendations. Of the initial eight reports submitted for adoption to the Global Forum in Singapore in September 2010, only Bermuda’s and that of one other jurisdiction met all the elements, with some recommendations. Following a rigorous consultation exercise with industry, Bermuda passed the Specified Business Legislation Amendment Act 2011 to address many of those recommendations.
Bermuda also plays a lead role in the innovative Caribbean Catastrophe Risk Insurance Facility, in which Caribbean governments lead the way in pre-disaster planning, designed to limit the financial impact of catastrophic hurricanes and earthquakes on Caribbean governments by quickly providing short-term liquidity when a policy is triggered. Bermuda, recognising its leadership role in global finance and noting its developed economy, not only became a member of CCRIF, purchasing hurricane insurance, but also joined the donor nations, making a contribution to the Trust Fund
About the Author
Laura Hershey Laura Hershey is treaty advisor for the Ministry of Finance of the Government of Bermuda.