Bermuda’s insurance lobby has joined forces with its Irish counterpart to push back against proposed European securitisation rules.
They warned that the framework risks locking non-EU insurers out of a market worth billions of euros – a fight with implications stretching as far as the Cayman Islands.
The Association of Bermuda Insurers and Reinsurers (ABIR) and Insurance Ireland released a joint position paper as the EU reviews its securitisation framework.
The process, tied to the bloc’s Savings and Investments Union, aims to create better financial opportunities for EU citizens, while enhancing our financial system’s capability to connect savings with productive investments.
At issue are proposed size thresholds, group recognition rules and safeguard requirements that the two bodies said could in practice shut out EU-authorised insurers belonging to groups headquartered outside the bloc.
ABIR president and CEO John Huff said a well-functioning securitisation market would allow banks to manage risk, free up regulatory capital and expand lending to households, SMEs and long-term investment projects.
Under current arrangements, insurers provide unfunded credit protection that enables banks to transfer a portion of their credit risk without selling the underlying loans.
Bermuda reinsurers paid about €24.8 billion to EU policyholders and cedants between 2016 and 2020, according to ABIR.
The paper called for targeted adjustments, including recognising group supervision in equivalent jurisdictions and calibrating size thresholds to reflect market realities.
“Insurance Ireland and ABIR… jointly support targeted, proportionate clarifications to the securitisation package that preserve strong prudential safeguards,” the paper said.
It added this should happen “while ensuring that the framework is workable in practice, reflects how insurancе groups are supervised, and allows a sufficiently broad and competitive pool of insurers to support the real economy in the EU”.
