The Bermuda Monetary Authority proposes a new class of insurer - Parametric Special Purpose Insurer

In a Consultation Paper (CP) published on 21 January 2026, the Bermuda Monetary Authority (BMA) outlined its proposal for a new class of insurer, the Parametric Special Purpose Insurer (PSPI).  This new class of insurer is designed to support Bermuda’s alternative capital (re)insurers that plan to adopt parametric business models.  The establishment of the PSPI, however, will not require existing registrants that offer parametric covers to reclassify.  Rather, the new class will provide an additional pathway for prospective registrants.

A PSPI is a special purpose insurer that writes fully-collateralised (re)insurance business and transfers risk via a parametric cover.  The BMA states in the CP that the PSPI framework will be fit-for-purpose and will be instrumental in growing a robust parametric insurance market.  The PSPI framework will it is hoped close current coverage gaps associated with climate change and emerging risks.  Some advantages of parametric coverages include an accelerated pay out processes, coverage that can be customized and coverage of non-physical damages.  

The PSPI framework will distinguish between restricted and unrestricted business and maintain the core pillars of the existing SPI framework with specific caveats associated with the parametric insurance market.  One significant change from the existing SPI framework will be to allow PSPIs to conduct insurance transactions with other sophisticated cedants such as qualified regional and national corporates, entities that demonstrate a mature risk function and experienced insurance buyers.

The target effective date for the PSPI class is Q2 2026.  The fees for PSPIs will the same as the current SPI fees, $10,000 for restricted and $15,000 for unrestricted.  It is proposed that the BMA will waive fees for any structures licenced within the first year that the PSPI class is established.

The consultation period ends on 27 February 2026.  The BMA is requesting feedback on the following four questions:

• Do you foresee any negative impact on the Bermuda ILS market as a result of implementing the PSPI class?
• Considering the Special Purpose Insurer Guidance Note dated 1 July 2020, what are the concerns with the current SPI framework that would be prohibitive for parametric ILS business?
• Are there any amendments that the Authority should consider in its definition of a PSPI that are not already specified in the CP?
• Do you have any other views that would be deemed material to the implementation of the PSPI as an additional class of insurer?

Readers are welcome to reach out to their usual Kennedys contact if they want further information regarding the proposed new class of insurer or want to submit comments.