During a panel session earlier today at the ILS Bermuda Convergence 2025 conference, it was announced that the Bermuda Monetary Authority (BMA) is currently in the final stages of implementing a new special purpose insurer (SPI) class that will primarily focus on the use of parametric triggers.
Early in the session, Demerling highlighted how the industry is seeing an increasing interest in novel insurance-linked securities (ILS) structures, particularly climate-linked parametric triggers.
With this, she then asked Talbot how the BMA is preparing for these innovations from a regulatory standpoint, prompting him to make the announcement.
“Last year, I mentioned that we (BMA) was in the research phase for a new special purpose insurer class, which will look at the use of parametric triggers. We’re now in an advanced stage where we’re nearing internal approvals and we’ll be going out to consultations shortly to implement this new class,” Talbot explained.
“We see the potential for parametric covers to help fill the protection gap that exists, and we’ve had success in our special purpose insurer class.”
Talbot continued: “It’s a low-risk class due to its full collateralized nature. So, we want to leverage the success we’ve had in the SPI class and give parametrics a space to evolve.”
Furthermore, Talbot also suggests that this new SPI class will extend the potential of the BMA’s current SPI class, but in a bespoke manner for the parametric marketplace.
“Essentially, it will be built from the foundations of the current SPI class – fully collateralized, with contractual certainty and sophisticated participants. But we will look at some expanded features of parametric such as the use of swaps, derivatives, basis risk, and sophistication of various cedents.
“So, it’ll basically enhance what we have and be bespoke for parametric covers,” he concluded.
