Notice - Insurance Amendment Act 2015 (2015-01-22)

Summary

This is a Bermuda Monetary Authority consultation notice announcing a draft Insurance Amendment Act 2015, which would amend the Insurance Act 1978 and related regulations to move certain insurer classes onto a statutory economic capital and surplus reporting basis. The notice summarises the draft Bill's clauses and invites industry comment before finalisation.

• Scope of change: Introduces new definitions for statutory economic balance sheet and total statutory economic capital and surplus, applicable to Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurers and insurance groups.
• Loss Reserve Specialist Opinion (LRSO): Narrows the existing LRSO requirement (section 18B) to Class 2 and Class 3 insurers only; Class 3A, 3B and 4 insurers instead rely on statutory economic balance sheet calculations.
• Approved Actuary Opinion (AAO): Limits the existing AAO requirement (section 27) to Class A and Class B insurers; Class C, D and E insurers instead follow the relevant Prudential Standards Rules 2011.
• Group actuary opinion: Amends section 27G so the group actuary opinion must be submitted under the Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011.
• Non-compliance with enhanced capital requirements: Amends section 31AA so an insurer that fails to meet enhanced capital requirements must provide the Authority with an interim statutory economic balance sheet, in addition to unaudited interim GAAP financial statements and any other prudential standard requirements.
• Consequential regulation changes: Makes related amendments to the Insurance Returns and Solvency Regulations 1980 (Schedule 1), including terminology changes and clarifying that certain solvency filing provisions apply to Class A and Class B insurers.

The Authority proposed that these amendments commence on 31 December 2016, with some requirements not enforced until 2018. As a consultation draft, the Act was not yet in force at the time of this notice; stakeholders were invited to submit comments to policy@bma.bm by 27 February 2015.

Key obligations

• Interested parties must submit comments on the proposed Insurance Amendment Act 2015 to policy@bma.bm by 27th February 2015.
• If enacted as proposed, Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurers and insurance groups would be required to report to the Authority on a statutory economic capital and surplus basis from 31 December 2016, with some requirements not enforced until 2018.
• If enacted, an insurer that fails to comply with enhanced capital requirements would be required to provide the Authority with an interim statutory economic balance sheet in addition to unaudited interim GAAP financial statements and any other applicable prudential standard requirements.

Applies to

Class 2 insurers, Class 3 insurers, Class 3A insurers, Class 3B insurers, Class 4 insurers, Class A insurers, Class B insurers, Class C insurers, Class D insurers, Class E insurers, insurance groups

Deadlines

• 27th February 2015: Deadline for interested parties to submit comments on the proposed Insurance Amendment Act 2015 to policy@bma.bm.
• 31st December 2016: Proposed commencement date of the Insurance Amendment Act 2015 and start of statutory economic capital and surplus reporting for affected insurer classes.
• 2018: Some of the new requirements under the proposed Act are not to be enforced until this year.

Related documents

• This document amends Insurance Act 1978
• This document amends Insurance Returns and Solvency Regulations 1980