Government yesterday passed a bill increasing Bermuda Monetary Authority fees for banks, trusts and insurers to help fund 30 new globe-trotting regulators.
Minister of Finance Paula Cox said the additional manpower was needed following the International Monetary Fund´s review of Bermuda´s financial services legislation.
Although the report, published in January, 2005, recognised the effectiveness of much of Bermuda´s regulatory framework it highlighted areas where insurance legislation and practice required enhancement to be consistent with the new Insurance Core Principles adopted by the International Association of Insurance
Supervisors (IAIS) as well as the IAIS-agreed standards for the supervision of reinsurers.
Ms Cox said the IMF´s preliminary visit in July, 2006 for an update on developments will be followed by a full review in May, 2007.
“In order to continue to be seen as a credible regulator the Authority must demonstrate it has the resources and the skilled manpower to effectively regulate the industry.
“In this regard, the Authority intends to increase its insurance staff by 30 persons over the 2007/2008 period.”
The Bermuda Monetary Authority Amendment (No 2) Act 2006, passed with all-party support, amends the registration and annual fees for Class Four insurance companies from the current $55,000 to $200,000, following industry consultation.
Ms Cox said supervision of Bermuda-based investment groups could be costly to administer as the entity may have branches and subsidiaries in many countries, requiring onsite review visits both in Bermuda and elsewhere.
The amendment introduces two new fee tiers to cover the cost of consolidated supervision of such groups, with the highest fee being $100,000 and lowest fee being set at $25,000 per annum.
Trust fees will also go up for the first time in ten years with the Minister saying the level and complexity of supervision meant current fee levels were insufficient to cover the supervisory costs of the BMA.
Instead of a flat rate $10,000 annual fee, the costs will go up in relation to staffing levels. Those with fewer than five people still pay $10,000.
Trust companies with between five and nine persons pay $17,500 while those with ten or more will pay $30,000.
New banding levels have been brought in for the banking sector according to the consolidated gross assets of an institution.
Institutions paying the lowest rate of $12,500 are in Band A which has had its threshold raised from $100 million to $500 million.
Band B, which used to run from $100 million to one billion now runs from $500 million to one billion – such companies pay $75,000 while Band C companies with gross assets of more than a billion pay $155,000.
Opposition Finance spokeswoman said Patricia Gordon-Pamplin said fees had doubled for Class Four re-insurers three years ago and she sought assurances the money would be used for the stated purpose.
And she said the hunt for 30 regulators would not be easy given the demand for skilled professionals in that sector.
Her colleague Grant Gibbons noted that Britain was boasting it had a light regulatory touch but Bermuda was hiring more regulators.
He said the regulatory fervour could stifle the smaller reinsurers which had enjoyed Bermuda´s lower costs but which could now find it more difficult to expand.
