Insurance Brokers and Insurance Agents Code of Conduct

Summary

This is the Bermuda Monetary Authority's Code of Conduct for Insurance Brokers and Insurance Agents, issued under section 2BA of the Insurance Act 1978. It sets out the standards, procedures and practices the Authority expects registered Insurance Brokers and Insurance Agents to follow in conducting their business, and forms the basis on which the Authority assesses whether such firms are operating in a sound and prudent manner. Compliance is assessed proportionately, based on each firm's nature, scale and complexity.

• Governance and fitness: Controllers and officers must be fit and proper, and firms must maintain a documented corporate governance framework and a qualified board.
• Prudent business conduct: Boards and senior management must identify and document key risks, maintain appropriate controls, adequate staffing and training, and hold adequate (including professional liability) insurance.
• Records and reporting: Firms must maintain adequate financial systems, books and records in Bermuda, and ensure prudential filings and regulatory applications are timely and accurate.
• Client relationships and disclosure: Firms must safeguard client funds, disclose fee structures and terms of business, and provide clients with specified pre-contract information about insurers, coverage, premiums, cancellation rights and claims procedures.
• Complaints, fraud and confidentiality: Firms must document complaint-handling procedures, business continuity plans, conflict-of-interest policies, fraud prevention measures, and controls to keep client and insurer information confidential.
• AML/CFT and sanctions: Insurance Brokers dealing in long-term business must carry out client due diligence and comply with Bermuda's anti-money laundering, anti-terrorist financing and sanctions legislation.
• Outsourcing and cooperation: Firms remain ultimately responsible for outsourced functions, must cooperate openly with the Authority, and must give written notice of specified material events (e.g. anticipated non-compliance, staff fraud, changes to indemnity cover, material cyber breaches).

The Code took effect immediately on publication (February 2019), with an established deadline of 1 January 2020 for firms to achieve full compliance.

Key obligations

• Ensure controllers and officers meet fit and proper person criteria and notify the Authority immediately of material concerns about a controller or officer, including remediation actions taken
• Implement a documented corporate governance framework and appoint a qualified board of directors
• Maintain adequate staffing, training, systems, controls and documented policies to ensure diligent and proper conduct of business, including identification of suspicious financial transactions
• Maintain policies and procedures to prevent and detect fraud and criminal activity and ensure compliance with AML/ATF regulations and international sanctions
• Hold adequate insurance coverage, including professional liability insurance, proportionate to the nature and scale of operations
• Insurance Agents may only place business with Bermuda-registered insurers (or as permitted by their Certificate of Registration) and must obtain the Authority's prior approval before placing business with another Insurance Agent
• Maintain adequate financial systems, controls, books and records in Bermuda, including client, policy and financial records
• Maintain sufficient safeguards for client funds, including separate client trust accounts distinguishable from the firm's own accounts
• Disclose a documented fee structure to each client and give adequate notice before any change to fees or services
• Provide written terms of business to each client, including services, fees, termination terms and licensing status
• Provide clients with specified minimum disclosures before conclusion of an insurance contract (insurer identity, coverage, premium, taxes, cancellation rights, claims process)
• Document and communicate a complaint handling procedure to all policyholders, clients and insurers
• Maintain documented policies and procedures for confidentiality, business continuity/disaster recovery, conflicts of interest and fraud
• Insurance Brokers dealing in long-term business must conduct client due diligence before acting for a new client and comply with Bermuda's AML/ATF legislation and sanctions requirements
• Perform due diligence on outsourced service providers and retain ultimate responsibility for outsourced functions
• Notify the Authority of proposed material changes to the business plan and significant developments in operations, staffing or systems
• Give written notice to the Authority of anticipated non-compliance, staff fraud/dishonesty, material changes to indemnity cover, or material cyber breaches
• Achieve full compliance with the Code by 1 January 2020

Applies to

Insurance Brokers, Insurance Agents

Deadlines

• immediately upon publication: The Code comes into effect immediately when published (February 2019).
• 1 January 2020: Established deadline for Insurance Brokers and Insurance Agents to achieve compliance with the Code.

Related documents

• This document is made under Insurance Act 1978