Consultation Paper - Repeal of Section 57(1)(a) of the Insurance Act 1978 (2014-06)

Summary

This is a Bermuda Monetary Authority consultation paper proposing to repeal Section 57(1)(a) of the Insurance Act 1978, which currently exempts insurance business conducted by registered friendly societies and trade unions for their own members from regulation under the Act. The Authority is seeking industry feedback on the proposal before deciding whether to proceed.

• Current position: Insurance business carried on by a registered friendly society or registered trade union for its members is presently deemed not to be insurance business and falls outside the Authority's regulatory and supervisory remit.
• Proposed change: Repeal Section 57(1)(a) so that insurance business conducted by these entities becomes subject to the same prudential regulation and supervision as other insurance providers.
• Rationale: Aligns Bermuda's framework with International Association of Insurance Supervisors (IAIS) Insurance Core Principles and with approaches taken in the UK and Australia, in the interests of policyholder protection.
• Transition period: The Authority proposes a 90 day transition period from the date the repeal takes effect for any registered friendly society or trade union writing insurance business to become compliant with the Insurance Act 1978.

The paper does not itself change the law; it invites written comments on the proposal, to be submitted to the Authority by 30 July 2014. If the repeal proceeds, affected friendly societies and trade unions would need to achieve compliance with the Insurance Act's licensing and prudential requirements within the proposed transition window.

Key obligations

• Interested persons and the insurance industry must submit comments on the proposal to policy@bma.bm no later than 30 July 2014.
• If the repeal is enacted, registered friendly societies and trade unions writing insurance business would need to become compliant with their obligations under the Insurance Act 1978 within the proposed 90 day transition period from the date of repeal.

Applies to

registered friendly societies, registered trade unions, insurers

Deadlines

• 30th July, 2014: Deadline for submitting comments on the consultation proposal to the Authority (policy@bma.bm).
• ninety days from the date of the repeal of Section 57(1)(a): Proposed transition period for registered friendly societies or trade unions writing insurance business to become compliant with the Insurance Act 1978.