Insurance Code of Conduct (Revised December 2014)

Summary

This is the Bermuda Monetary Authority's Insurance Code of Conduct, issued under section 2BA of the Insurance Act 1978, setting out standards of sound and prudent business conduct for insurers registered under section 4 of the Act. Compliance is assessed on a proportionality basis according to an insurer's nature, scale and complexity, and failure to comply is a factor the Authority weighs when assessing whether an insurer is conducting business soundly and prudently.

• Corporate governance: Requires a sound governance framework, an effective board with oversight responsibilities, defined chief and senior executive responsibilities, and proper oversight of insurance managers and principal representatives.
• Risk management: Requires identification and management of material risks (underwriting, investment/liquidity/concentration, market, credit, operational, group, strategic, reputational, legal) and documented policies and procedures.
• Governance mechanisms: Requires establishment of risk management, internal control, internal audit, compliance and actuarial functions, plus periodic self-assessment against the Code.
• Outsourcing: Requires appropriate oversight where functions, including insurance management, are outsourced.
• Market discipline and disclosure: Covers responsibilities to policyholders, integrity and fair dealing, skill/care/diligence, disclosure, protection of policyholder assets, oversight of authorised intermediaries, fair advertising, policy servicing and complaints handling.

The Code applies to all insurers (including reinsurers) registered under the Insurance Act 1978, and by extension to their boards, chief and senior executives, insurance managers, principal representatives and authorised intermediaries. It came into effect on 1 January 2015.

Key obligations

• Every insurer must establish and maintain a sound corporate governance framework providing appropriate board oversight and protecting policyholder interests.
• The board must ensure the business is effectively directed and managed with integrity, due care and appropriate professional skills, and must assess the fitness and propriety of members, controllers and officers.
• Where an insurance manager is employed, the board must ensure duties, responsibilities and authorities are clearly set out in a management agreement, including cooperation obligations with the Authority.
• Insurers must establish risk management, internal control, internal audit, compliance and actuarial functions appropriate to their business.
• Insurers must have policies and procedures for protecting and handling confidential policyholder information.
• Where an insurer controls or is responsible for policyholder assets, it must arrange appropriate protection consistent with contractual terms.
• Insurers must ensure authorised intermediaries carrying on business in Bermuda are registered with the Authority, disclose the insurer and products represented, and operate under a written contract.
• Advertisements must be clear, fair and not misleading, and must meet specified content requirements (no misleading statements, clear risk disclosure, proper treatment of past performance and tax statements).
• Insurers must service policies through to satisfaction of all obligations and provide timely disclosure of contractual changes to policyholders.
• Insurers must have procedures to handle claims and policyholder complaints promptly, fairly, and with documented records retained.

Applies to

insurers, reinsurers, insurance managers, principal representatives, authorised intermediaries, limited purpose insurers

Deadlines

• January 1st 2015: Date the Insurance Code of Conduct comes into effect.

Related documents

• This document is made under Insurance Act 1978