ANSWER:
I visited Bermuda and was also curious about the colors used on the building on the island so I hopped on my rented moped and headed to a local paint manufacturer, Bermuda Paint to ask them about the history of the colors and how the colors are changing today.
Buildings in Bermuda characterised by white slate roofs, stepped chimneys and pastel-washed walls are instantly recognisable. Bermuda’s distinctive color palette began in the 17th century when the early settlers were challenged with building shelters from
unfamiliar materials for a climate that was quite different from that of their homelands.
The original simple, practical structures were constructed of indigenous materials including Bermuda Cedar, stone, lime and palmetto. Lime was mixed with water 
to make whitewash which was often tinted with color before being applied to the exterior of buildings.
From the nice folks at Bermuda Paint I learned that traditionally people chose to cover their homes in the colors of flowers. The most popular traditional colors are hues of yellows, pinks, coral, peach, and greens. Blue and other non-traditional colors were not used as an exterior paint color until more recently.
Bermuda's government does not dictate the colors and the color palette has changed as vibrant paints have replaced the more subtle tones of the traditional lime wash. A homeowner can paint their home any color they choose and some people have chosen to use non-traditional hues but most of the buildings in Bermuda are still adored with the colors of flowers.
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