Insurance Market Place Code of Conduct

Summary

This is the Bermuda Monetary Authority's Code of Conduct for registered Insurance Market Places, issued under section 2BA of the Insurance Act 1978. It sets out duties, standards and operational expectations the Authority will use to assess whether an Insurance Market Place is conducting business in a sound and prudent manner, applied proportionately to each firm's nature, scale and complexity.

• Governance and fitness: Controllers and officers must be fit and proper, and the board must implement a documented corporate governance framework and appoint qualified directors.
• Prudent business conduct: The board and senior management must maintain adequate staffing, controls, accounting policies, physical presence in Bermuda, and appropriate professional liability insurance.
• Records and reporting: Firms must keep adequate books, records and client information in Bermuda and ensure prudential filings and regulatory applications are timely and accurate.
• Client relationships: Firms must disclose fee structures, agree written terms of business, safeguard client monies in segregated accounts, and keep client and insurer information confidential.
• Complaints, conflicts and fraud: Documented procedures are required for complaint handling, conflicts of interest, fraud prevention, and business continuity and disaster recovery planning.
• AML/CFT and sanctions: Firms conducting direct long-term business must carry out client due diligence and comply with Bermuda's anti-money laundering, anti-terrorist financing and sanctions legislation.
• Outsourcing: Firms must conduct due diligence on outsourced service providers and retain ultimate responsibility for outsourced functions.
• Regulatory cooperation: Firms must cooperate openly with the Authority and give written notice of material compliance issues, staff fraud or dishonesty, material changes to indemnity cover, or material cyber breaches.

The Code took effect immediately on publication, with a compliance deadline of 1 January 2021 for Insurance Market Places to meet its requirements.

Key obligations

• Controllers and officers of an Insurance Market Place must meet fit and proper person criteria and the firm must notify the Authority immediately of material concerns about a controller's or officer's appropriateness
• The board must implement a documented corporate governance framework and appoint qualified individuals to the board
• The firm must maintain adequate staffing, systems, controls and documented policies to ensure diligent performance of duties and proper processing of client transactions
• The firm must have appropriate policies to prevent and detect fraud and criminal activity and comply with AML/CFT and sanctions regulations
• The firm must hold adequate insurance coverage, including professional liability insurance, proportional to its risk profile
• The firm must keep and preserve appropriate records in Bermuda, including client, transaction and financial records
• Where the firm holds client funds, it must maintain separate client trust accounts distinguishable from its own accounts
• The firm must have a documented fee structure disclosed to each client, with adequate notice of any fee or service changes
• The firm must agree written terms of business with each client covering services, fees, termination terms, and licensing status
• The firm must document and implement controls to keep client and insurer information confidential, including cyber risk management and staff training
• The firm must have and communicate a documented complaint handling procedure and maintain a complaint register
• The firm must document a business continuity and disaster recovery plan and test it regularly
• The firm must have documented policies for conflicts of interest and disclose conflicts to clients, declining to act if unresolved
• Firms dealing with direct long-term business must carry out client due diligence before acting for a new client
• The firm must perform due diligence on outsourced service providers and remains ultimately responsible for outsourced functions
• The firm must give the Authority written notice of anticipated non-compliance, staff fraud or dishonesty, material changes to indemnity cover, or material cyber breaches
• Insurance Market Places must achieve compliance with the Code by 1 January 2021

Applies to

Insurance Market Places (as defined under section 1(1) of the Insurance Act 1978)

Deadlines

• Immediately upon publication (15 May 2019): The Code comes into effect immediately when published.
• 1 January 2021: Established deadline for Insurance Market Places to achieve compliance with the Code.

Related documents

• This document is made under Insurance Act 1978