Insurance Amendment Act No.2 2021

Summary

This is a draft Bermuda bill that amends the Insurance Act 1978 in several unconnected ways, chiefly to bring insurance marketplace providers and innovative intermediaries within existing supervisory provisions, to clarify the Authority's powers to vary registration conditions, to expand notification duties, and to rewrite the priority rules for paying debts when a dual licensed (composite) insurer is wound up.

• Scope expansion: Section 2 is amended so the Authority's statutory powers expressly extend to supervising insurance marketplace providers; section 6E is extended to cover innovative intermediaries as well as innovative insurers.
• Registration conditions: A new section 10(3) to (5) lets the Authority add, vary or delete conditions on an insurance manager, broker, agent, insurance marketplace provider or salesman at any time, with a right for the affected person to make written representations before the Authority acts, and lets the Authority re register a person in a different class.
• Officer definitions: New definitions of officer are added to section 30CA (for insurance marketplace providers and for managers, brokers or agents) and section 30J is amended (repealing subsections (5) and (7)(b), and redefining officer for innovative insurers) for purposes of change of control or personnel notifications.
• Notification events: Section 30JE(3) is expanded so insurance managers or intermediaries must notify the Authority of an amalgamation with, acquisition of, or merger with another firm.
• Solvency declarations: Section 31AA(1)(b) replaces the requirement for a general business solvency certificate with a requirement for an updated declaration of compliance, to be filed by insurance groups and commercial insurers that fail to meet the enhanced capital requirement.
• Winding up priority rules: Section 36(4) and new subsections (7) to (7H) rework how debts are paid where a composite (dual licensed) insurer's long term business fund or general business fund has a shortfall, allowing surplus in one fund to be applied to preferential and insurance debts of the other before other creditors are paid, with remaining surplus pooled for non preferential creditors.
• Housekeeping deletions: References to innovative insurer are removed from sections 17(4)(b) and 18A(2)(b) because that class is not required to file statutory financial statements; section 30JEA(3) is repealed; section 32D's cross reference is updated to include sections 15A(6), 18A and 30CA(4).
• Consequential amendment: A Schedule adds corresponding entries to the Bermuda Monetary Authority Act 1969 covering the Authority's power to vary or delete registration conditions and to re register persons in a different class under new section 10(3) and 10(5).

As a bill it is not yet in force; the text states it is deemed to come into effect on 1 January 2022 once enacted. Firms in the affected categories should watch for enactment and, once effective, be ready to respond to Authority notices on conditions, file updated declarations of compliance where relevant, and report amalgamation, acquisition or merger events.

Key obligations

• Insurance managers, brokers, agents, insurance marketplace providers or salesmen must respond with written representations within the period specified in an Authority notice before the Authority varies or deletes registration conditions under new section 10(3).
• Insurance managers or insurance intermediaries must notify the Authority of any amalgamation with, acquisition of, or merger with another firm, under amended section 30JE(3).
• Insurance groups and commercial insurers that fail to comply with the enhanced capital requirement must submit an updated declaration of compliance (replacing the former general business solvency certificate) under amended section 31AA(1)(b).

Applies to

insurance managers, brokers, agents, salesmen, insurance marketplace providers, innovative insurers, innovative intermediaries, insurance groups, commercial insurers, composite (dual licensed) insurers

Deadlines

• 1 January 2022: Stated commencement date on which the Act is deemed to come into effect, once enacted.

Related documents

• This document amends Bermuda Monetary Authority Act 1969
• This document amends Insurance Act 1978