BMA Insurance Regulatory Sandbox and Innovation Hub Guidance Note (September 2018)

Summary

This Guidance Note explains the BMA's Insurance Regulatory Sandbox and Innovation Hub, two voluntary innovation tracks aimed initially at insurtech companies seeking to test new insurance products, services or delivery mechanisms in Bermuda under modified regulatory requirements.

• Sandbox: For companies intending to become licensed as regular insurers (Section 4) or insurance intermediaries (Section 10) under the Insurance Act 1978; allows limited-scale, time-bound testing with BMA-modified legislative and regulatory requirements and a distinct Sandbox licence identifier (e.g. ILT, IGB, IM, IA, IB).
• Innovation Hub: A lower-commitment channel for dialogue with the BMA Innovation Working Group, open to insurtech and other companies (including those not yet ready for Sandbox proof-of-concept), with casual engagement free and a formal, fee-based category for closer development work.
• Eligibility criteria: Applicants must show the product/service is genuinely innovative, demonstrate research and risk mitigation, define testing objectives and reporting commitments, assess and mitigate risks to policyholders, and show ability to meet full legal requirements upon exit.
• Application process: Submit an application with a fee of $6,180 to IWG@bma.bm (and hard copy to the Licensing and Authorisations Department) for review by the Assessment and Licensing Committee (ALC), which meets weekly to approve, defer or decline applications.
• Proof-of-concept phase: Typically runs 6 to 12 months; companies must give regular updates (e.g. monthly reports/calls), notify and obtain written risk acknowledgements from clients, and maintain a client complaints log available to the BMA.
• Deployment and exit: On completion, companies must submit a final report to the BMA; a change of class application is needed to be licensed outside the Sandbox, after which full legal and regulatory requirements apply.
• Extensions: Companies needing more time must apply and pay an extension fee at least one month before the Sandbox period expires, providing reasons and supporting documents.
• AML/CFT compliance: Sandbox participants must comply with the Proceeds of Crime Act 1997, the Anti-Terrorism (Financial and Other Measures) Act 2004, related AML/CFT regulations, and applicable international sanctions.
• Transparency: The BMA will publish a list of companies approved for the Sandbox on its website.

The Note also sets out illustrative use cases (Appendix III) for both tracks, covering examples such as blockchain-based insurance platforms, smart contract policy management, and policy wording review tools, though these are non-exhaustive and do not guarantee approval.

Key obligations

• Companies must satisfy Sandbox eligibility criteria (innovation, research/due diligence, defined testing objectives, risk mitigation, exit strategy) before applying.
• Applicants must submit a Sandbox application with the requisite fee of $6,180 to IWG@bma.bm and by hard copy to the Licensing and Authorisations Department.
• During the proof-of-concept phase, companies must provide regular updates to the BMA (e.g. monthly written reports and calls) as agreed.
• Companies must notify clients that products/services are being tested in the Sandbox, disclose key risks, and obtain written client acknowledgement of those risks.
• Companies must maintain a client complaints log available to the BMA.
• Any material changes to agreed testing parameters or extension requests must be approved by the Authority in advance.
• Upon completion of proof-of-concept, companies must submit a final report to the BMA on testing outcomes, including client feedback.
• Companies must fully extinguish all existing and future obligations to policyholders before exiting the Sandbox.
• Companies must comply with AML/CFT legislation (Proceeds of Crime Act 1997, Anti-Terrorism (Financial and Other Measures) Act 2004, related regulations) and applicable international sanctions while in the Sandbox.
• To extend the Sandbox period, a company must apply and pay the applicable extension fee at least one month before the Sandbox period expires.

Applies to

insurtech companies, regular insurers (Section 4), insurance intermediaries (Section 10), insurance managers, insurance brokers, insurance agents, start-ups and existing insurance licensees seeking to test innovative products

Deadlines

• at the latest one month before the expiration of the Sandbox period: Deadline to apply for and pay the extension fee if a company requires an extension of its Sandbox period.
• typically six to 12 months: Expected duration of the proof-of-concept phase within the Sandbox.
• within two weeks of the initial contact: Timeframe within which the Authority typically responds to applicants with further information requests or questions prior to the scheduled ALC meeting.