Insurance Code of Conduct – Revised August 2022

Summary

This is the Bermuda Monetary Authority's Insurance Code of Conduct (Revised August 2022), issued under Section 2BA of the Insurance Act 1978. It sets out governance, risk management and conduct-of-business standards that the BMA expects registered insurers to meet, applying a proportionality principle based on each insurer's nature, scale and complexity. Non-compliance is treated as a factor in assessing whether an insurer is conducting business soundly and prudently.

Scope and structure

• Corporate governance: Requires a sound governance framework, an effective Board with appropriate independent non-executive directors, fitness and propriety assessments, board renewal policies and periodic board effectiveness reviews.
• Risk management: Requires a risk management framework covering underwriting, investment/liquidity, market, credit, operational, group, strategic, systemic/reputational, legal and ESG risks, plus policies, procedures and business continuity/disaster recovery arrangements.
• Governance mechanisms: Requires functioning risk management, internal controls, internal audit, compliance and actuarial functions, and periodic self-assessment against the Code.
• Outsourcing: Sets expectations for oversight and control of outsourced functions.
• Conduct of business: Requires insurers to act with integrity, manage conflicts of interest, treat policyholders fairly, ensure staff competence, apply product governance and suitability standards, protect vulnerable policyholders, and handle sales and claims fairly.
• Communications and policyholder protection: Requires clear, fair, non-misleading communications and advertisements, pre-sale disclosure, terms of business, policy servicing notices, safeguarding of policyholder assets, and documented complaint and claims-dispute handling procedures.

The Code applies proportionately across all insurers registered under Section 4 of the Insurance Act 1978, including limited purpose insurers, with heightened expectations for firms with more complex or larger-scale business.

Key obligations

• Establish and maintain a sound corporate governance framework providing oversight of the business and protection of policyholder interests
• Ensure the Board has an appropriate number and mix of directors, including independent non-executive directors where required, commensurate with the insurer's nature, scale and complexity
• Establish and maintain, annually, policies and procedures addressing actual or potential conflicts of interest
• Assess Board effectiveness no less frequently than every three years and upon material change in business activities or risk profile
• Establish and maintain a risk management framework addressing all material risk categories (underwriting, investment/liquidity, market, credit, operational, group, strategic, systemic/reputational, legal, ESG)
• Maintain business continuity and disaster recovery arrangements
• Maintain functioning risk management, internal controls, internal audit, compliance and actuarial functions, and perform periodic self-assessment against the Code
• Establish oversight controls over outsourced functions
• Conduct business with integrity and ensure fair treatment of policyholders, including product governance, suitability and protection of vulnerable policyholders
• Ensure communications and advertisements to policyholders are fair, clear and not misleading, with disclosure prior to providing services and clear terms of business
• Protect policyholder assets against loss, fraud and misuse
• Document a complaint-handling procedure (including a complaint register) and make complaint-handling information publicly accessible
• Establish balanced and impartial claims dispute resolution procedures
• Communicate policyholders' responsibilities and provide resources to support informed decision-making

Applies to

insurers registered under Section 4 of the Insurance Act 1978, reinsurers, limited purpose insurers (Class 1, Class 2, Class 3, Class Innovative Insurer General Business (IIGB), Special Purpose Insurer, Collateralized Insurer, Class A, Class B)

Deadlines

• 1 September 2022: Code comes into force
• 1 March 2023: Registrants required to be compliant with Section 8 (Conduct of Business) of the Code
• 1 September 2023: Registrants required to be compliant with Sections 1 to 7 of the Code

Related documents

• This document is made under Insurance Act 1978