NOTICE-Draft Rules for Annual Filing Requirements of Insurance Marketplace Providers and Class IIGB Insurers (2019-10-31)

Summary

This is a BMA consultation notice announcing draft Rules that would set annual filing requirements for two new categories created under 2019 amendments to the Insurance Act 1978: Insurance Marketplace Providers (platforms for buying, selling or trading insurance contracts) and Class IIGB insurers (Innovative Insurer General Business companies). It summarises the proposed regulatory framework and invites industry comment before the Rules are finalised.

Insurance Marketplace Providers

Focus areas: Framework centres on fit and proper requirements for controllers and officers, governance and risk management, and operational, technology and cyber risk controls; existing broker and agent regulatory framework also applies as an intermediary class.
Declaration of Compliance: Directors and the Chief Executive would be required to submit a Declaration of Compliance.
Annual qualitative return: A qualitative return with supporting schedules covering governance, risk management, cyber risk, sanctions and AML/ATF compliance, accompanied by year-end management accounts and next year's business plan.

Class IIGB Insurers

Solvency and liquidity: Minimum solvency and minimum liquidity requirements similar to Class 3A insurers.
Enhanced capital requirement: A capital solvency return model similar to Class 3A, calibrated at 99% Tail Value at Risk over a one year horizon.
Digital asset capital factors: Capital factors applied to financial accounts denominated in digital assets, with potential hedging relief where digital assets are tied to matching insurance contracts or fully collateralized business.
Additional disclosures: Disclosures akin to Digital Asset Business Act 2018 requirements, covering governance, risk management and internal controls over custody and safekeeping of digital assets, segregation of client assets, cyber security, sanctions, and AML/ATF regulations if applicable.
Declaration of Compliance: A Declaration of Compliance to be submitted to the BMA and posted on the BMA website.

The BMA is inviting the insurance industry and other interested persons to comment on the draft Rules before they are finalised; these requirements are not yet in force.

Key obligations

Under the proposed Rules, Insurance Marketplace Providers' Directors and Chief Executive would need to submit a Declaration of Compliance
Insurance Marketplace Providers would need to file an annual qualitative return with supporting schedules on governance, risk management, cyber risk, sanctions and AML/ATF compliance, plus year-end management accounts and next year's business plan
Class IIGB insurers would need to meet minimum solvency and liquidity requirements and an enhanced capital requirement using a TVaR-based capital solvency return model
Class IIGB insurers would need to apply capital factors to digital asset denominated accounts and make additional disclosures on digital asset governance, custody, segregation of client assets, cyber security, sanctions and AML/ATF compliance
Class IIGB insurers would need to submit a Declaration of Compliance and have it posted on the BMA website
Interested persons must send comments on the draft Rules to riskanalytics@bma.bm no later than 30 November 2019

Applies to

Insurance Marketplace Providers, Class IIGB insurers (Innovative Insurer General Business)

Deadlines

30 November 2019: Deadline for the insurance industry and other interested persons to submit comments on the draft Rules to the BMA at riskanalytics@bma.bm