Best's Review



A Safe Space

Bermuda regulators developed a sandbox environment where startups can experiment with new technology.
  • Meg Green
  • August 2019
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The Bermuda Monetary Authority has recently introduced a regulatory sandbox in Bermuda which is aimed at new, fledgling companies that want to test out new technology on a limited group of policyholders within a confined space under guidance from the organization, said Becky Vernon, senior counsel at ASW Law. She spoke with AMBest TV at the Bermuda Captive Conference.

What is the BMA doing in terms of innovation today?

The idea is that the [tech companies] enter the regulatory sandbox for a period of 6 to 12 months, and during that time they work through their proof of concept. If everything goes according to plan at the end of that period, they will be able to apply for a full insurance license.

That insurance license could be in either one of the captive classes that we currently have, or in the commercial classes, or in fact in one of the new innovative insure classes that the BMA is currently considering introducing.

Can you tell us a little bit about those new classes and how they might work?

The IGB and ILT insurance licenses are the sandbox licenses. The IGB is the general business license and the ILT is the long-term business license.

The companies that apply for this sandbox entry can at the time of their application seek certain regulatory exemptions from provisions of the Insurance Act. They will operate in the sandbox under a less stringent regulation than they would if they had applied for a full license.

The purpose of this is to try and encourage innovation. It may be that the capital requirements are reduced for the sandbox period, but the BMA also makes it clear that there are other provisions of the legislation they won't be exempted from.

For example, anti-money laundering provisions, anti-terrorist finance provisions, they will still have to comply with those. It's really aimed at reducing capital costs for these entities while they're operating within the sandbox.

The new innovative insurer class is an interesting one. This is really going to be focused on companies that are graduating from the sandbox, or new insurers that want to incorporate digital assets into their business model.

This class is intended to operate very similar in terms of regulation to a Class 3A in a commercial insurer. It will be subject to a head office requirement. It will have to prepare a risk base capital model that's very similar to the BSCR.

That's currently under consultation with the BMA. It hasn't yet been introduced but we're watching this space and looking forward to seeing how that develops.

Meg Green is a senior associate editor, AMBestTV. She can be reached at

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