Bermuda, Solvency II and equivalence (and some US comment)

No doubt you would have seen the release of EIOPA's equivalence work to date on Japan, Switzerland and Bermuda. Summary articles here and here if you haven't.

I will take a more substantial look at Bermuda's report shortly (in the context of Ireland's captive preparations, it could be a welcome fillip to the country if there is an exodus). They were certainly singled out as the least-well prepared, being criticised on a number of legal requirements as well as wholesale gaps in governance requirements and, more worryingly, capital requirements which, in EIOPA's words, "in practice can be very low for insurers with a high risk profile".

Interestingly one of the USA's finest insurance commissioners weighed in on equivalence this week. I suspect it was not intended as a sleight to refer to the prevailing European regime as "admittedly outmoded", though he appears to be to be staunchly conservative in his stance, commenting "...any equivalence process must respect the different legal and regulatory systems that exist around the globe".

A request perhaps to "respect his authoritaah" a la Mr Cartman? Certainly a view not shared by the queue of other countries wishing to attain equivalence, and a repetition of the IFRS/US GAAP protracted convergence the most likely result.