The Bermuda Monetary Authority has published its response to feedback on the proposed Parametric Special Purpose Insurer (PSPI) class, clarifying the scope and operation of the specialized framework first proposed in January. Existing insurers may continue writing parametric risks under other licence classes without relicensing or redomiciling that business. The PSPI regime will support structured, fully collateralized parametric risk transfers through reinsurance contracts, derivatives or swaps, provided they demonstrate insurance risk transfer characteristics and meet applicable requirements. Existing Special Purpose Insurers may apply to reclassify as PSPIs, while firms seeking to combine indemnity and parametric business will be assessed case by case against their prudential, operational and governance arrangements. Eligible collateral must be high quality, readily realizable and enforceable, with the Authority considering a limited expansion beyond cash, cash equivalents and letters of credit. Its preliminary position is that transactions within an approved business plan will not need separate preapproval, while transactions outside those parameters will require prior engagement. The Authority is drafting an amendment to the Insurance Act 1978 to implement the PSPI class in the fourth quarter of 2026. It also plans to issue comprehensive guidance covering matters including sophisticated participants, third-party validators, trigger methodology, data reliability and product governance.

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