Bermuda has been the world's premier reinsurance domicile for decades, but it has also worked hard to ensure that new business models — parametric insurance, sidecars, ILS, and now tokenised risk transfer — have a clear, supervised route to market. The BMA's Innovative Insurer framework is one of the most significant expressions of that ambition: a structured pathway that allows genuinely novel (re)insurance businesses to operate under regulatory supervision before they have the capital or track record to qualify for a standard licence.
What is the Innovative Insurer framework?
The Bermuda Monetary Authority launched its Innovation Hub and associated regulatory guidance to allow insurance and reinsurance businesses with new operating models to engage with the regulator early — before full licence application. Rather than trying to fit a blockchain-based parametric insurer into a Class 3B reinsurance licence framework designed for traditional balance-sheet carriers, the BMA created a track that acknowledges the novel nature of the business and provides proportionate oversight. Key elements of the framework: - Early regulatory engagement: Businesses can engage with the BMA before formal application, getting guidance on which licence class fits and what adaptations may be needed. - Proportionate capital requirements: For early-stage or limited-scope businesses, the framework allows for capital requirements calibrated to the actual risk profile, not a legacy standard. - Innovation Hub support: The BMA's dedicated innovation team works directly with applicants — explaining requirements, flagging risks, and providing feedback on business models that have no direct precedent. - Sandbox operations: In some cases, businesses can conduct limited operations under supervisory oversight before full licensing, allowing proof-of-concept without full regulatory burden.
Why Bermuda built this
Bermuda's reinsurance market was itself an innovation when it emerged after Hurricane Andrew in 1992. The 'Class of 1992' — RenaissanceRe, PartnerRe, LaCrosse — were capitalised rapidly because Bermuda's regulatory environment was responsive and proportionate. The same logic applies today. If a tokenised ILS fund, an onchain parametric reinsurer, or a blockchain-based collateral trustee has to navigate a regulatory framework designed for Munich Re, they will simply go elsewhere. The BMA's innovation frameworks are designed to prevent that flight and keep Bermuda at the centre of the next wave of (re)insurance capital formation. This is not regulatory arbitrage — the BMA is a respected, well-resourced supervisor with strong international standing (IAIS member, IOSCO member, EU Solvency II equivalence). Innovative Insurer status still means being regulated. It just means being regulated proportionately.
Who uses the Innovative Insurer pathway?
The framework is designed for businesses that fall into one or more of these categories:
- Tokenised (re)insurance: Businesses that use blockchain or distributed ledger technology to represent, transfer, or collateralise insurance risk — e.g. tokenised cat bond SPVs, onchain collateral trusts.
- Parametric-only carriers: Insurers and reinsurers that write exclusively parametric covers and have fundamentally different loss adjustment processes from indemnity carriers.
- ILS innovation: New fund structures, sidecar models, or investor access vehicles that don't fit neatly into existing Class 3 or Class C frameworks.
- Insurtech platforms: Technology platforms that underwrite, distribute, or administer insurance risk in ways that blur the lines between carrier, intermediary, and service provider.
- Digital asset business with insurance risk: Firms that combine DABA-regulated digital asset activity with insurance risk transfer — such as tokenised reinsurance funds like MembersCap.
The relationship with DABA
For onchain reinsurance businesses, the Innovative Insurer framework often operates alongside Bermuda's Digital Asset Business Act (DABA). A company tokenising reinsurance exposure — issuing tokens that represent a share of a reinsurance risk pool — is likely conducting both insurance business (requiring a BMA insurance licence) and digital asset business (requiring a DABA licence). The BMA is one of the few regulators globally that has thought through how these two frameworks interact, allowing dual-licensed businesses to operate in a way that satisfies both the insurance regulatory requirements and the digital asset business requirements simultaneously. MembersCap, which is BMA-authorised and operates a tokenised reinsurance investment strategy, is an example of this dual-framework approach in practice.
How to engage with the framework
The BMA's Innovation Hub is the entry point. Businesses can submit an initial enquiry describing their model, and the Innovation Hub team will provide guidance on the appropriate licensing pathway. The BMA publishes guidance on its website and has historically been accessible and responsive compared to equivalent innovation programmes at other regulators. Key steps for a typical Innovative Insurer applicant: 1. Submit initial enquiry to BMA Innovation Hub 2. Receive guidance on applicable licence class and any novel regulatory issues 3. Engage in pre-application meetings with BMA supervisors 4. Submit formal licence application with BMA-adapted business plan 5. Operate under supervisory oversight with agreed reporting obligations 6. Pathway to standard licensing as the business scales and track record develops Timelines vary but the BMA has demonstrated ability to move faster than most comparable regulators — important for businesses competing in fast-moving markets.