Insurance Amendment No.1 Act 2022

Summary

This is a draft Bermuda bill that would amend the Insurance Act 1978 to bring a new category of registered person, insurance marketplace providers, within the Bermuda Monetary Authority's supervisory powers, extend certain innovative insurer provisions to innovative intermediaries, add new notification and condition-variation powers, and rewrite the priority-of-debts rules that apply when a composite insurer is wound up. It also makes a consequential amendment to the Bermuda Monetary Authority Act 1969.

• New registered category: Section 2 is amended so the Authority's supervisory functions expressly extend to insurance marketplace providers, alongside managers, brokers, agents and salesmen.
• Innovative intermediaries: Section 6E is extended to cover innovative intermediaries, not just innovative insurers.
• Condition variation power: A new section 10(3)-(5) lets the Authority add to, vary or delete registration conditions for a manager, broker, agent, insurance marketplace provider or salesman, with a duty to give notice and consider written representations before acting on its own initiative.
• 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.
• Officer definitions: Section 30CA is amended to define officer for insurance marketplace providers and for managers, brokers or agents, for notification-of-change purposes; section 30J similarly redefines officer for innovative insurers and repeals subsections (5) and (7)(b).
• New notification trigger: Section 30JE(3) is expanded so managers and intermediaries must notify the Authority of an amalgamation with, acquisition of, or merger with another firm.
• Repeal: Section 30JEA(3) is repealed as a housekeeping measure.
• Declaration of compliance: Section 31AA is amended to require insurance groups and commercial insurers to submit an updated declaration of compliance (replacing the general business solvency certificate) when they fail to meet the enhanced capital requirement.
• Winding up of composite insurers: Section 36 is substantially rewritten to set out a detailed order of priority for paying preferential and insurance debts across an insurer's long-term and general business funds, including cross-fund application of surplus assets.

As a bill it has not yet been enacted; the commencement clause states the Act will be deemed to come into effect on a date left blank in the draft text. The changes will bind the affected entities only once the Act is passed and brought into force.

Key obligations

• Once in force, insurance managers, brokers, agents, insurance marketplace providers or salesmen subject to a notice under new section 10(4) must, within the period specified in that notice, make any written representations they wish the Authority to consider before it varies or deletes their registration conditions.
• Insurance managers or intermediaries must notify the Authority of an amalgamation with, acquisition of, or merger with another firm, as a new notifiable event under section 30JE(3).
• Insurance groups and commercial insurers that fail to comply with the enhanced capital requirement must submit an updated declaration of compliance under amended section 31AA.

Applies to

insurance managers, insurance brokers, insurance agents, salesmen, insurance marketplace providers, innovative insurers, innovative intermediaries, insurance groups, commercial insurers, composite insurers

Deadlines

• XX XXX 2022 (date left blank in draft): Commencement date on which the Act is deemed to come into effect, per clause 16; not yet specified in this draft bill.
• such period as may be specified in the notice: Period within which a manager, broker, agent, insurance marketplace provider or salesman may make written representations before the Authority varies or deletes registration conditions under new section 10(4).

Related documents

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