Consultation Paper on Building Resources to Meet Advances in Global Insurance Supervision (2008-09-12)

Summary

This is a 2008 BMA consultation paper proposing changes to annual business fees and transaction fees for commercial insurers, aimed at funding the Authority's build-out of supervisory resources needed to pursue mutual recognition (notably with the EU under Solvency II, and eventually the US). It follows the 2008 reclassification of the former Class 3 sector into Class 3A (small commercial) and Class 3B (large commercial) insurers.

• Who is affected: Class 3A, Class 3B and Class 4 commercial insurers, and long-term insurers; captive insurers (Class 1-3) are explicitly intended to be unaffected by fee increases
• What is proposed: A sliding scale of annual business fees for Class 3B and Class 4 insurers based on size, revised fees for long-term insurers, and increases to a range of transaction/application fees (e.g. Section 56 directions, asset approvals, internal model approvals)
• Policy goal: To fund enhanced on-site supervision, relationship management, BSCR development, and international mutual recognition work, while leaving the captive sector's regulatory framework and fees broadly unchanged
• Guidance included: Appendix 1 provides guidance on how the BMA will interpret the scope of Class 3A and 3B categories, including business plan content required for re-registration applications

As a consultation paper, this document does not itself impose binding fee obligations; it invites stakeholder feedback before final proposals are submitted to the Ministry of Finance for the Minister's consideration.

Key obligations

• Interested parties wishing to comment on the fee proposals must submit written comments to the BMA (Suzanne Williams) no later than 10th October 2008
• Business plans submitted with re-registration applications for Class 3A/3B classification must include an executive summary, ownership details, description of insurance programs, 3-year pro-forma statutory financial statements, and supporting assumptions (per Appendix 1A)
• A Class 3A insurer that breaches the $50 million unrelated net premiums threshold must have its principal representative notify the Authority and apply under section 56 for a direction to remain in Class 3A, including particulars of the circumstances, unaudited interim financial statements, and a general business solvency certificate

Applies to

Class 1 insurers, Class 2 insurers, Class 3 insurers (captives), Class 3A insurers, Class 3B insurers, Class 4 insurers, long-term insurers, insurance managers, brokers and agents

Deadlines

• 10th October 2008: Deadline for interested parties to submit written comments on the consultation proposals to the BMA
• 31st March each calendar year: Existing requirement that annual business fees are payable by registered insurers