Consultation Paper on Disclosures and Transparency (June 2010 Update)

Summary

This is a 2010 Bermuda Monetary Authority consultation paper setting out a phased plan to enhance public and regulatory disclosure requirements for commercial insurers. It proposes new qualitative and quantitative disclosures, invites industry comment, and does not itself impose final binding rules -- changes would be effected through future legislation and rules following consultation.

• Scope of Phase 1 proposals: Initially applies to Class 4 and Class 3B insurers and insurance groups because of their more complex risk profiles; some requirements to be extended to Class 3A insurers, with a trial run planned for 2010 year-end.
• Captives and segregated accounts companies: No significant changes proposed for the captive regime beyond the Notifications section; a separate consultation paper on segregated accounts companies regulatory reporting was planned for Q4 2010.
• Long-term insurers excluded: This paper does not address Long-term (life) insurers; a separate consultation paper on the Long-term regime was planned for Q3 2010.
• Phased implementation: Phase 1 covers reporting periods 2009 to 2011 (regulatory disclosures, governance, risk management, CISSA, Cat Return, economic balance sheet); Phase 2 covers 2012 to 2014 and Phase 3 covers 2015 onward, with increasing emphasis on public disclosures.
• Related initiatives: Extension of the BSCR to Class 3B insurers for 2010 year-end, development of a simplified BSCR-SME for Class 3A insurers, and implementation of the group BSCR for insurance groups for 2010 year-end (though group solvency requirements were not to take effect until Q3 2012).
• Content proposed for disclosure: Appendices set out proposed Phase 1 disclosure items for Class 4, Class 3B, Class 3A insurers and insurance groups, covering corporate governance, risk management, group capital and solvency, CISSA, Cat Return, underwriting and claims performance, investments, group structure, intra-group transactions, compliance, and public disclosures (audited financial statements, risk management, corporate governance, financial condition and solvency report).

As a consultation paper, the document invites comments from the insurance industry and other interested persons, to be sent to policy@bma.bm no later than August 31, 2010. Any resulting requirements were to be implemented through enabling and secondary legislation enacted annually across the three phases, following further consultation at each stage.

Key obligations

• Interested persons and industry participants must submit comments on the proposals to policy@bma.bm no later than August 31, 2010
• Class 3B insurers were required to submit trial disclosures similar to Class 4 requirements for the 2009 year-end
• Class 3A insurers were expected to participate in a trial run of certain proposed disclosures for the 2010 year-end, including a BSCR-SME data call between May and July 2010
• Insurers must continue to make audited general purpose financial statements public from the 2008 reporting year onward

Applies to

Class 4 insurers, Class 3B insurers, Class 3A insurers, insurance groups, captive insurers, segregated accounts companies, Long-term (life) insurers (excluded from this paper)

Deadlines

• August 31, 2010: Deadline for industry and interested persons to submit comments on the consultation proposals to policy@bma.bm
• 2009 to 2011: Phase 1 of the disclosures framework, covering enhanced regulatory disclosures on risk management, governance, CISSA, Cat Return and economic balance sheet
• 2012 to 2014: Phase 2 of the disclosures framework, focused primarily on public disclosures
• 2015 and beyond: Phase 3 of the disclosures framework
• 2010 year-end: Trial run period for Class 3A insurer disclosures and extension of BSCR to Class 3B insurers
• Q3 2012: Date by which group BSCR solvency requirements for insurance groups were to come into effect
• Q3 2010: Planned publication of a consultation paper on revisions to the Long-term insurance regime
• Q4 2010: Planned publication of a consultation paper on regulatory reporting for segregated accounts companies