Discussion Paper: Proposed Enhancements to Insurance Supervision and Enforcement Powers (February 2009)

Summary

This is a BMA discussion paper from February 2009 seeking stakeholder feedback on possible new supervisory and enforcement powers for insurance regulation. It compares Bermuda's current toolkit (licence cancellation, removal of controllers or officers, directions under the Insurance Act 1978) against powers used by other insurance regulators, and proposes areas where the Authority may seek expanded powers. It is a consultation only, not a change in law, and sets out priorities and timing for any follow-up legislative work.

• Publicity of enforcement action: Proposal to give the Authority an express power to publicise enforcement action and breaches, similar to powers already used under AML/CTF legislation and the Investment Business Act; described as the Authority's top priority, with legislative process to begin promptly.
• Powers concerning individuals: Consideration of requiring registration of individuals in specified functions, and of a broader power to ban (not just bar) unfit directors, officers or controllers from industry roles; to be progressed via a policy statement expected in Q3 2009.
• Civil fines: Consideration of introducing a civil fining power for insurance, modelled on the fining power in the Proceeds of Crime Regulations (Supervision and Enforcement) Act; the Authority does not intend to start any legislative process on this before early 2010, pending experience with that existing power.
• Other powers and winding up role: Review of additional powers used in other jurisdictions (e.g. Australia, UK, Singapore, Guernsey) and of the Authority's role in insurer winding up proceedings, to better identify and address misconduct by officers.
• Broader application: Many proposals, especially publicity of enforcement action, are noted as potentially applicable beyond insurance; a further consultation covering banking, trust and investment business enforcement (and market perimeter issues) is flagged for Q4 2009.

Stakeholders were invited to submit written comments and answer specific discussion questions on or before 31 March 2009, addressed to the BMA's Deputy Director. No powers are being implemented by this paper itself; it only frames proposals for future consultation and potential legislation.

Key obligations

• Stakeholders wishing to comment were asked to submit written comments and responses to the discussion questions to the BMA (Harry Whitcher, Deputy Director) on or before 31 March 2009.

Applies to

insurers, insurance managers and agents, auditors, actuaries, controllers, directors and officers of insurers, other Bermuda-regulated financial industry participants (potentially, in future consultation)

Deadlines

• 31 March 2009: Deadline for stakeholders to submit written comments and answers to the discussion points raised in the paper.
• third quarter of the year (2009): Anticipated issuance of a policy statement on suitability/fitness and propriety of individuals for senior industry positions.
• fourth quarter of the year (2009): Anticipated issuance of a further consultation paper covering enforcement powers for banking, trust and investment business, and perimeter issues.
• early 2010: Earliest point the Authority intends to initiate a legislative process for a civil fining power for insurance, pending experience with the similar power under the Proceeds of Crime Regulations (Supervision and Enforcement) Act.