Recent legislative amendments in Bermuda have bolstered the powers of the Bermuda Monetary Authority ("the BMA"), the independent body charged with the supervision and regulation of the financial services industry on the island.

The Insurance Amendment Act 2006 (the "Amendment Act"), which became effective on 24 July 2006, and the Insurance Amendment (No. 2) Act 2006 (the "Second Amendment Act"), which became effective on 29 December 2006, both amend the Insurance Act 1978 (the "Act").

The Amendment Act gives the BMA new or strengthened powers to supervise and investigate persons in the insurance industry, including insurers and insurance managers. It also requires the BMA to publish a statement of principles setting out how it is going to exercise its powers under the new legislation.

The BMA may now give written notice requiring any person to assist in such an investigation by providing such information or documents that the BMA may reasonably require. It may also enter any premises occupied by any person on whom notice is served in order to obtain documents or information specified in the notice. These powers, however, do not apply to documents covered by legal professional privilege in proceedings in Bermuda.

The Amendment Act requires notice from any person planning to become a 10%, 20%, 33% or 50% controller of an insurer. The new definition of "controller" includes a managing director or chief executive of a "registered person", defined in the Act as any insurance company, insurance manager or intermediary that is required to register with the BMA under the provisions of the Act.

The Amendment Act also establishes an appeals process for those parties aggrieved by certain actions taken by the BMA, including objections to persons becoming controllers.

The Second Amendment Act makes provision for the promulgation of codes of conduct by the BMA. These codes of conduct would lay down the duties, requirements and standards that registered persons would be expected to comply with, and the procedures and sound principles that must be observed by them in the conduct of their business.

The new powers granted to the BMA are designed to continue the development of Bermuda’s insurance regulatory framework and the growth of the island’s international business sector.

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