Discussion Paper on Implementing Group-wide Supervision (2009-03-31)

Summary

This is a 2009 discussion paper from the Bermuda Monetary Authority proposing a new framework for group-wide supervision of insurance groups. It sets out the Authority's rationale, proposed scope, and high-level supervisory approach, and invites industry comment before any rules are finalised.

• Scope: Group-wide supervision would initially apply to Class 4 and Class 3B insurers and their groups or sub-groups, including foreign subsidiaries and non-regulated or non-financial entities within the group.
• Group-wide Supervisor role: The Authority proposes criteria for determining whether it, or another equivalent regulator, acts as Group-wide Supervisor, based on factors such as where the group's main business activities and largest balance sheet are located.
• Supervisory framework elements: Proposed areas covered include group corporate governance and risk management, group solvency assessment, treatment of intra-group transactions and risk concentration, eligible capital structure, treatment of unregulated/non-financial entities, and group statutory reporting and filing requirements.
• Cooperation and equivalence: The paper proposes reliance on supervisory colleges, mutual recognition of equivalent regimes, and cooperation with foreign supervisors to implement group-wide supervision without duplicating solo supervision.
• Legislative change: The Authority acknowledges that implementing this framework will require changes to primary and secondary legislation, plus codes of conduct and guidance.

As a discussion paper, this document does not itself impose binding requirements; it invites feedback from the insurance industry and other interested persons on the proposals, which were expected to be followed by further consultation papers on specific aspects (e.g. solvency, reporting) later in 2009.

Applies to

Class 4 insurers, Class 3B insurers, insurance groups and sub-groups, unregulated and non-financial entities within insurance groups, banking, trust and investment entities (existing non-insurance group supervision)

Deadlines

• May 29th, 2009: Deadline for interested persons to submit comments on the discussion paper to policy@bma.bm