Consultation Paper - Proposed Enhancements to the Insurance Group Supervision Framework (2024-12-04)

Summary

This is a Bermuda Monetary Authority consultation paper proposing changes to the insurance group supervision framework under the Insurance Act 1978. It sets out proposed amendments to move from an indirect (designated insurer) model toward a direct supervisory approach, including mandatory group supervision triggers and a new framework for designating and registering insurance holding companies. The BMA is seeking industry feedback before finalising any legislative changes.

• Proposal one: Introduce mandatory group supervision where the insurance group is headed by a specified Bermuda (re)insurer or by an ultimate parent entity incorporated in Bermuda that also owns insurers outside Bermuda.
• Proposal two: Revise the Authority's withdrawal as group supervisor (Section 27D) to clarify when withdrawal can occur, generally only where mandatory criteria are no longer met and other conditions apply.
• Proposal three: Introduce a statutory definition of an Insurance Holding Company.
• Proposal four: Create the concept of a Designated Insurance Holding Company that would assume the role currently played by the Designated Insurer.
• Proposal five: Establish a registration process for designated insurance holding companies.
• Proposal six: Apply a minimum set of direct supervisory powers to designated insurance holding companies of insurance groups, including those designated as IAIGs.
• Proposal seven: Extend shareholder controller change and material change requirements to designated insurance holding companies of insurance groups.

The proposals are relevant to Bermuda-based (re)insurers, insurance holding companies, ultimate parent entities incorporated in Bermuda, and groups designated as Internationally Active Insurance Groups (IAIGs). The BMA invites written comments and responses to specific consultation questions raised under each proposal, and outlines consequential amendments and commencement provisions to follow if the proposals proceed.

Key obligations

• Interested parties wishing to respond must submit comments to the BMA by 15 January 2025.
• If enacted, entities headed by a specified Bermuda insurer or an ultimate parent entity incorporated in Bermuda would become subject to mandatory group supervision by the BMA.
• If enacted, an entity designated as an Insurance Holding Company (or Designated Insurance Holding Company) would need to register with the BMA and assume the compliance, reporting and governance duties currently held by the Designated Insurer.
• If enacted, designated insurance holding companies of insurance groups (including IAIGs) would become subject to a minimum set of direct BMA supervisory powers and to shareholder controller/material change notification requirements.

Applies to

Bermuda (re)insurers (Class 3A, 3B, 4, C, D, E), insurance groups, Internationally Active Insurance Groups (IAIGs), designated insurers, insurance holding companies, ultimate parent entities incorporated in Bermuda

Deadlines

• 15 January 2025: Deadline for submitting comments on the consultation paper's proposals to the BMA.