Instructions for the Proposed Property and Casualty Bermuda Solvency Capital Requirement Model (2013-07-22)

Summary

This is a Bermuda Monetary Authority (BMA) consultation document accompanying a test version of an updated Bermuda Solvency Capital Requirement (BSCR) model for Property and Casualty (P&C) insurance business. It explains how to use the test model, which reflects proposed refinements described in the BMA's June 2013 consultation paper, and invites feedback before a final model is produced for 2013 year end.

• Purpose: Provides instructions and technical notes for running a test BSCR model reflecting proposed changes, including a known VBA error message to ignore, reordered tabs, and highlighted amended cells.
• MSM floor: Model incorporates a proposed floor to the Minimum Solvency Margin of 25% of the Enhanced Capital Requirement, per the Insurance Returns and Solvency Amendment Regulations 2013.
• Reinsurance and credit risk inputs: Guidance on how to treat assets held by ceding companies (line item 12, Form 1A) in Schedule II(a) and Schedule V(c), and on inputting credit risk data for the cat charge in Schedule V rows 29 to 34.
• Class 3A adjustments: Schedule IX(b) has been modified for Class 3A companies to simplify input of concentration adjustment factors for premium and reserve risk charges.
• Simplifying steps: Companies may enter an operational risk charge percentage directly on the Summary tab instead of completing full operational risk schedules, and may use estimates where data is unavailable since the model is for testing only.
• Feedback requested: BMA seeks feedback on the overall capital impact, areas needing more guidance, difficulties completing the model, and any errors or anomalies found.

This is a testing and consultation exercise rather than a final rule; it does not itself impose ongoing regulatory requirements beyond participation in the feedback process by the stated deadline.

Key obligations

• Companies wishing to provide feedback must send responses to riskanalytics@bma.bm no later than close of business on 6th September 2013.

Applies to

Property and Casualty (P&C) insurers, Class 3A insurers

Deadlines

• 6th September 2013 (close of business): Deadline for companies to submit feedback and responses on the test BSCR model to the BMA via riskanalytics@bma.bm.