Consultation Paper on Disclosure and Transparency (June 2009)

Summary

This is a 2009 BMA consultation paper setting out a proposed phased enhancement to Bermuda's insurance disclosure and transparency regime. It focuses initially on Class 4 and Class 3B insurers because of their more complex risk profiles, with Class 3A insurers to be addressed in a later, separate consultation. Long term insurers are not covered here; a separate discussion paper on that sector was planned for late 2009.

• Phase 1 (2009-2011): Enhanced and standardised regulatory (non-public) disclosures on risk management, governance, underwriting, investments/derivatives and preparation for group-wide supervision, plus research into group-wide supervision, ORSA and economic balance sheet concepts.
• Phase 2 (2012-2014): Primary focus shifts to introducing public disclosures, intended to be broadly equivalent to outcomes expected under Solvency II Pillar 3, including a public disclosure trial run.
• Phase 3 (2015 onward): Transition period with further public disclosure enhancements to be determined based on international standards and market consultation at that time.
• Existing requirement: Insurers already required to make audited general purpose financial statements public from the 2008 reporting year; this continues unchanged.
• Captive insurers: No changes proposed to the captive regime, though it will be reviewed periodically against evolving international standards.
• Legislative mechanism: Enabling and secondary legislation is proposed to be enacted annually over the three phases to implement the specific reporting obligations, with further market consultation on each year's draft legislation.

As a consultation paper, the document itself does not create binding disclosure obligations; it invites industry and other interested parties to comment on the proposals, including the detailed Phase 1 disclosure items for Class 4 and Class 3B insurers set out in the appendices.

Key obligations

• Interested parties, including Class 4 and Class 3B insurers, must submit comments on the proposals to policy@bma.bm no later than 31 August 2009.
• Under the proposed Phase 1 framework, Class 4 and Class 3B insurers would be required to make enhanced regulatory (non-public) disclosures covering risk management, governance, underwriting performance, investments and derivatives, and group-wide supervision preparation for reporting periods 2009 to 2011.
• Insurers are already required to make audited general purpose financial statements public from the 2008 reporting year onward (an existing, continuing requirement).

Applies to

Class 4 insurers, Class 3B insurers, Class 3A insurers (future phase), captive insurers, Long-term insurers (excluded from this paper)

Deadlines

• 31 August 2009: Deadline for submitting comments on the consultation proposals to policy@bma.bm
• reporting periods 2009 to 2011: Phase 1 of the proposed enhanced regulatory disclosures for Class 4 and Class 3B insurers
• reporting periods 2012 to 2014: Phase 2, primarily introducing public disclosures
• reporting periods 2015 and beyond: Phase 3, transition period with further disclosure enhancements
• 2011: Proposed introduction of an enhanced disclosures regime for Class 3A insurers, subject to further consultation
• fourth quarter of 2009: Planned publication of a discussion paper on the Long-term insurance regime