Consultation: 2019 Amendments – Alternative Capital Schedule (with draft Rules)

Summary

This is a BMA consultation notice, dated 1 July 2019, proposing amendments to Bermuda's insurance prudential rules and returns regulations concerning the Alternative Capital Schedule. It attaches draft Rules and Regulations for public comment; the changes are not yet in force.

The amendments would formalise and update the existing filing requirement (in use since a January 2018 Notice) for insurers funded by alternative capital arrangements to prepare and submit a detailed Alternative Capital Schedule, and would also insert a new Schedule XXIV requiring all insurers to report on their sanctions screening processes and any asset freezes.

• Draft instruments attached: Insurance (Prudential Standards) (Class 3A Solvency Requirement) Amendment (No.3) Rules 2019; Insurance (Prudential Standards) (Class 4 and Class 3B Solvency Requirement) Amendment (No.3) Rules 2019; and Insurance Returns and Solvency Amendment Regulations 2019 (inserting new regulation 14N).
• Alternative Capital Schedule (Schedule V, new paragraph (y)): Insurers funded by alternative capital arrangements would have to report, per contract of insurance, 22 data points including insured name, contract reference, coverage type and line of business, exposure location, aggregate and net limits, key dates, gross and net premiums, attachment point, loss experience, collateral details and rating, and additional comments.
• New Schedule XXIV (Compliance with Sanctions): Every insurer would have to disclose whether it screens policyholders, beneficiaries and employees under the Bermuda sanctions regime, whether it has frozen client assets in the preceding 12 months (and every 12 months thereafter), details of any asset freezes (including designated person and asset value), and any additional relevant comments.
• Consultation deadline: Comments on the draft amendments must be submitted to riskanalytics@bma.bm by 29 August 2019.
• Proposed commencement: The Authority proposes the amendments take effect from 2019 year-end filings and beyond; the draft Rules specify commencement on 1 January 2020 applying to financial years commencing on or after 1 January 2019, while the draft Regulations specify commencement on 31 December 2019.

Because this is a consultation with draft rules, no obligation is currently binding; the substantive filing requirements described would only take effect once the Rules and Regulations are finalised and made, based on the proposed commencement dates above.

Key obligations

• Submit written comments on the draft amendments to riskanalytics@bma.bm by 29 August 2019
• Once finalised, insurers funded by alternative capital arrangements would be required to complete and submit the Alternative Capital Schedule (Schedule V paragraph (y)) with the specified 22 data fields for each contract of insurance
• Once finalised, all insurers would be required to complete new Schedule XXIV reporting on sanctions screening of policyholders, beneficiaries and employees and on any client asset freezes in the preceding 12 months (and every 12 months thereafter)

Applies to

insurers (including reinsurers), Class 3A insurers, Class 4 insurers, Class 3B insurers

Deadlines

• 29 August 2019: Deadline for submitting comments on the proposed amendments to riskanalytics@bma.bm
• 2019 year-end filings and beyond: Proposed effective date from which the Authority intends the amendments to apply
• 1 January 2020: Proposed commencement date of the draft Class 3A and Class 4/3B Solvency Requirement Amendment (No.3) Rules 2019
• financial years commencing on or after 1 January 2019: Period to which the draft Rules would apply once in force
• 31 December 2019: Proposed commencement date of the draft Insurance Returns and Solvency Amendment Regulations 2019 (inserting regulation 14N)

Related documents

• This document amends Insurance Returns and Solvency Regulations 1980