Insurance Manager Code of Conduct 2016

Summary

This is the Bermuda Monetary Authority's Insurance Manager Code of Conduct, issued under Section 2BA of the Insurance Act 1978. It sets out the duties, standards and procedures that Insurance Managers (IMs) registered under Section 10 of the Act must observe in order to be considered as conducting business in a sound and prudent manner. The Authority applies the Code proportionately, having regard to each IM's nature, scale and complexity, and non-compliance is a factor the Authority will weigh when assessing an IM against the minimum licensing criteria.

• Governance and fitness: Controllers and officers must meet fit and proper criteria; IMs must maintain a documented corporate governance framework, a qualified board, and manage conflicts of interest, including with group-affiliated brokers or insurers.
• Prudent conduct and controls: Boards and senior management must identify business risks, maintain effective risk management, compliance and internal audit functions, and implement AML/CFT and sanctions compliance policies.
• Insurance cover: IMs must maintain professional liability insurance appropriate to their operations, with professional indemnity insurance as a minimum.
• Records, reporting and client agreements: IMs must keep records in Bermuda, maintain adequate staffing, have documented business continuity plans, use transparent client fee structures and written terms of business, and handle complaints in writing.
• Ethics, disclosure and reputation: IMs must act with integrity, skill and due care, observe confidentiality obligations, conduct customer due diligence, and safeguard Bermuda's reputation through sound risk management.
• Cooperation with regulators: IMs must cooperate openly with the Authority, notify it of material business plan changes and significant operational developments.

The Code took immediate effect on publication in August 2016, but the Authority allowed insurance managers a transition period until 31 December 2016 to achieve full compliance.

Key obligations

• IMs must ensure controllers and officers meet fit and proper person criteria and notify the Authority immediately of material concerns about a controller or officer, along with remediation actions taken.
• IMs must implement a documented corporate governance framework and appoint qualified individuals to the board.
• IMs must manage conflicts of interest, including through documented management agreements with client entities.
• IMs must maintain professional liability insurance appropriate to their business, with professional indemnity insurance as a minimum requirement.
• IMs must have appropriate policies and procedures to prevent and detect fraud, comply with AML/CFT requirements, and comply with international sanctions in force in Bermuda.
• IMs must maintain effective risk management, compliance and internal audit functions and internal controls, appropriately segregated from those of managed entities.
• IMs must keep and preserve appropriate records in Bermuda, including client, insurance policy and financial records, and maintain a record-keeping system enabling timely provision of information.
• IMs must maintain a documented and transparent fee structure with each client before contracting, and give adequate notice of material fee changes.
• IMs must provide written terms of business to each client covering services, fees, termination terms and licensing status, and maintain written records of client complaints and resolutions.
• IMs must maintain a documented business continuity and disaster recovery plan.
• IMs must conduct customer due diligence on clients and their owners, directors and officers at the start of and throughout the relationship.
• IMs must observe confidentiality obligations regarding client information and advise employees in writing of confidentiality requirements upon engagement and periodically thereafter.
• IMs must cooperate openly with the Authority and notify it of proposed material changes to their business plan and significant operational, staffing or systems developments.
• IMs must achieve full compliance with the Code by 31 December 2016.

Applies to

Insurance Managers (IM) registered under Section 10 of the Insurance Act 1978

Deadlines

• 31st December 2016: Transition period deadline for insurance managers to achieve full compliance with the Code.
• immediately upon publication: The Code comes into effect immediately when published, in August 2016.

Related documents

• This document is made under Insurance Act 1978