Consultation Paper - Conduct of Business Regulatory Regime: Revisions to the Insurance Code of Conduct (September 2021)

Summary

This is a Bermuda Monetary Authority consultation paper (September 2021) seeking industry feedback on proposed revisions to Section 8 (Conduct of Business) of the Insurance Code of Conduct. The paper explains the rationale for the changes and is accompanied by Appendix I, a full red-lined/revised version of the Code showing the actual proposed text, dated December 2021 and stated to take effect 1 January 2022.

• Scope of application: New subsection 8.1 (integrity and conflicts of interest) is proposed to apply to all insurers registered under the Insurance Act 1978, while the remainder of Section 8 (8.2 to 8.6) is proposed to apply only to insurers writing retail business, defined per section 30JA(2) of the Insurance Act 1978 as products designed for and bought by individuals (including small and medium enterprises).
• New or enhanced requirements: Proposed additions include protections for vulnerable persons, a requirement that insurers retain documentation showing product recommendations were suitable for the policyholder, and broader general principles requiring all communications with policyholders (not just advertisements) to be fair, clear and not misleading.
• Alignment with IAIS standards: New provisions on claims handling (8.2.9), policy servicing (8.3.6) and claims disputes (8.5.2) are proposed to align the Code with IAIS Insurance Core Principle 19 on conduct of business.
• Consultation process: The Authority invites stakeholder comments on the proposals, to be sent to conduct@bma.bm using the attached comment form, no later than 25 October 2021.

The appended revised Code text itself states an implementation date of 1 January 2022, indicating the proposed changes were carried through into a finalised version of the Code, though this document is presented and dated as a consultation paper.

Key obligations

• Stakeholders wishing to comment must submit responses to conduct@bma.bm no later than 25 October 2021, using the prescribed comment form.
• Under the proposed/revised Code, all insurers registered under the Insurance Act 1978 must conduct business with integrity and have policies and processes to manage conflicts of interest fairly and transparently (section 8.1).
• Insurers writing retail business must comply with sections 8.2 to 8.6 of the Code, including fair treatment of policyholders, product governance, suitability assessments, protection of vulnerable policyholders, sales practices, claims handling, and dealings with authorised intermediaries.
• Insurers must retain documentation demonstrating that product recommendations were suitable for the policyholder's circumstances at the time.
• Insurers must ensure all communications with policyholders (not just advertisements) are fair, clear and not misleading.
• Insurers must maintain a complaint register recording complaints received and how they were resolved, and make complaint-handling procedures and contact details publicly accessible.
• Insurers must establish balanced and impartial claims dispute resolution procedures staffed by experienced, appropriately qualified personnel.
• Insurers must ensure policyholders are made aware of their responsibilities within the business relationship and have access to appropriate informational resources.
• The revised Insurance Code of Conduct is stated to come into effect on 1 January 2022.

Applies to

insurers registered under the Insurance Act 1978, reinsurers, insurers writing retail business, insurance managers, authorised intermediaries

Deadlines

• 25 October 2021: Deadline for stakeholders to submit comments on the consultation proposals to conduct@bma.bm.
• 1 January 2022: Stated effective/implementation date of the revised Insurance Code of Conduct, per the appended Code text.