'A Safe Environment'
Bermuda sandbox ideal for fintech innovation.
- David Pilla
- August 2019
Bermuda has set up a new sandbox for insurtech experimentation. The chief executive officer of AkinovA Ltd., the first company to get a license, welcomes the opportunity.
“We have been awarded a license to operate. The plan is that by the time we get out of the sandbox there are regulations that are specific to the infrastructure that we are developing,” said co-founder and CEO Henri Winand. “It's a safe environment for us, the regulator and our market participants because we have a license that states what we can do. The sandbox allows both the regulator and ourselves and the market participants to be protected while making sure there's a high degree of oversight, which we welcome.”
AkinovA is an electronic marketplace for the transfer and trading of insurance and reinsurance risks, Winand said.
“It's a marketplace where you can transfer risks and you can also do some trading,” he said. “We act as the marketplace at the confluence between insurance/reinsurance and the capital markets.”
In May, the Bermuda Monetary Authority granted its first insurance regulatory sandbox license to AkinovA (Bermuda) Ltd. The BMA last year launched the sandbox regime, which provides companies with a way to test new technologies and offer innovative products in a controlled environment.
The license will enable AkinovA to transfer risk using an electronic trading platform, Winand said.
The authorization permits AkinovA to enable cedents and intermediaries acting on their behalf to transfer risk to investors using its electronic platform. AkinovA is also permitted to provide integrated news, data, analytics and communications to marketplace participants, the company said in a statement at the time.
AkinovA is the wholly owned Bermuda trading subsidiary of AkinovA Ltd.
Last October, Bermuda Premier David Burt outlined the strategy behind the regulatory sandbox and how Bermuda was making regulatory changes to enhance its attraction to companies focusing on insurance innovation, insurance-linked securities, insurtech and fintech. Burt spoke with AMBestTV during the ILS Bermuda Convergence 2018 conference in Hamilton, Bermuda.
Winand said the regulatory oversight AkinovA gets from Bermuda is an important part of the company's innovation strategy. “We want to be regulated without a shadow of a doubt,” he said. “When you do anything with financial or insurance markets it has to be regulated.”
The company takes the view that because it has to be regulated, it can gather as much information as possible about the markets it seeks and use that information with maximum effect.
“We did a global survey of regulatory frameworks, and where the capital is flowing, and after a lot of work we landed on Bermuda as the place where we will start, even though we are a U.K.-registered company,” said Winand.
He said AkinovA incorporated a subsidiary in Bermuda, and describes it as “essentially a piece of infrastructure” rather than a broker or insurer. “There is no class for that,” he said.
The BMA makes sense as a regulator for a cross-discipline company like AkinovA, Winand said.
“It must be a regulator that knows both the capital markets and insurance and reinsurance,” he said. “It has to be an environment where the local geography has access to insurance and reinsurance markets—actuaries, lawyers, accountants.”
He noted the size of the capital flow through the domicile needs to be big enough, and “the size of the reinsurance and insurance-linked securities funds makes Bermuda one of the top” domiciles.
Another selling point for Bermuda: “As a company we wanted to be sure we could satisfy our clients as soon as possible so the speed and ability to engage rapidly with regulators was very important,” said Winand.
“Finally we had to be in an environment where the rule of law and proximity to the U.S. and U.K. capital markets was there,” he said.