Bermuda International Long Term Insurers and Reinsurers (BILTIR) today announced the release of a new report, titled Analysis of Systemic Risk in the Bermuda Long-Term Insurance Sector, published by Oliver Wyman through BILTIR’s commissioning. Using Oliver Wyman’s independent research and a variety of data sources, the report concludes that Bermuda’s long-term (re)insurance sector does not meaningfully contribute to global systemic risk.
“Amid questions about systemic risk within the Bermuda (re)insurance sector, BILTIR engaged experts at Oliver Wyman to conduct an independent examination of the industry and regulatory environment within our jurisdiction,” said Suzanne Williams-Charles, CEO of BILTIR. “Bermuda’s system is in place to manage risk and protect policyholders, and this report verifies that Bermuda’s diligent regulatory framework is effectively limiting any potential for systemic risk.”
The report evaluated three hypothetical scenarios frequently cited by regulators to question whether activities in the (re)insurance sector could trigger systemic risk. Specifically, Oliver Wyman analysed:
- Credit crisis triggering mass reinsurance capture
- Confidence shock triggering a mass lapse and sale of assets
- Withdrawal of insurer private credit demand
The report concludes that safeguards are in place to limit regulatory risk, including regulatory requirements and market practices. Additionally, it finds that the inherent long-term nature of insurance liabilities effectively limits the potential consequences of any stress on the broader financial system.
The report also provides recommendations to enhance stakeholders’ abilities to analyse and evaluate the potential risks within Bermuda. These recommendations include increased public transparency on transactions, ongoing regulatory oversight, and risk-based understanding of asset and liability portfolios.
Oliver Wyman maintained strict editorial control over the paper and developed its own conclusions from its analysis.
