The Bermuda Insurance Amendment Act 2014, renamed the Insurance Amendment Act 2015 (Amendment Act), was passed in the Senate in February 2015. The Amendment Act seeks to align Bermuda's insurance framework to take into account Solvency II standards and initiatives by revising the corporate governance requirements of insurers to make provision for the introduction and implementation of corporate policies and processes.
With the exception of the new section 15A (summarised below), which shall become operative on 31 December 2015, the Amendment Act became operative on 27 February 2015.
The Amendment Act amends the Insurance Act 1978 (Act) in several key areas as follows:
- Inserts the new section 15A which requires all insurers, on an annual basis, to deliver a declaration to the Bermuda Monetary Authority (BMA) confirming that they either meet or do not meet the minimum criteria for registration. Such criteria are further enhanced by virtue of the framework set out under the Insurance Code of Conduct 2010, and minimum margin of solvency and applicable eligible capital requirements. These new requirements provide that a civil penalty shall be imposed by the BMA in the event of non-compliance;
- Section 30JA(1)(a) of the Act clarifies and expands requirements for notifications to be provided by insurers for the purpose of matters considered to be a "material change" of their insurance business, relating to schemes of arrangement; and in subsection (1)(f) clarifies requirements for the purposes of outsourcing notification by providing that such notification is required when any one of the functions is outsourced by the insurer. It also adds a new requirement for notification to be provided upon the sale of an insurer under new subsection (1)(j);
- Section 30JB(4) of the Act increases the number of days (from 14 to 30 days) within which the BMA has to provide an insurer with a 'no objection' to a notification made by an insurer to effect a material change;
- Extends the restriction to payment of dividends under section 31B of the Act to all commercial insurers (Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurers) as opposed to only Class 3B and Class 4;
- Section 32 of the Act enhances the BMA's power of intervention, allowing the BMA to take actions to prevent an insurer being unable to meet its obligations to policy holders, and ensuring that the interests of clients and potential clients of an insurer are more effectively protected;
- Section 56 of the Act provides power for the BMA to modify requirements of insurers under section 27 of the Act with regard to the actuarial certificates of long-term business liabilities (making this analogous to general insurers); and
- Revises the Schedule to the Act providing for "Minimum Criteria for Registration". The revision to the Schedule introduces provisions for "Corporate Governance" requirements relating to the composition of the Board, and the requirement for insurers to have in place corporate governance policies and processes.
The Amendment Act constitutes a further step forward in the BMA's regulatory change programme to ensure that Bermuda's regulatory framework for commercial insurers obtains third-country equivalency under Solvency II.
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