Notice - Insurance Amendment (No.2) Act 2013 (2013-10-31)

Summary

This is a BMA consultation notice, dated 31 October 2013, setting out proposed amendments to the Insurance Act 1978 via the draft Insurance Amendment (No.2) Act 2013, together with draft consequential amendments to the Insurance Accounts Regulations 1980 and the Insurance Returns and Solvency Regulations 1980. The Authority invites market comment on the proposals before finalising them.

• Section 6(5) housekeeping fix: Extends existing requirements under section 6(5) of the Insurance Act to Class C and Class D insurers, correcting an omission dating from 2012.
• Reporting alignment for Class 3: Revises sections 17, 18A and 30J so that Class 3 insurers' reporting requirements, obligations and responsibilities are aligned with those already applicable to Class 1 and Class 2 insurers.
• Insurance Accounts Regulations changes: Schedule 1 amends statutory balance sheet and income statement forms (Forms 4, 5, 6 and 7), including revised line items for investments in and advances to affiliates, funds held by ceding reinsurers, and sundry assets, plus changes to actuarial reserve wording in Schedule III of those Regulations.
• Insurance Returns and Solvency Regulations changes: Schedule 2 amends Regulations 8, 8A, 9, 10, 12, 13 and 14 and Schedules I and III, introducing a new minimum margin of solvency (MMS) floor (Figure D) for Class 3A, 3B and 4 insurers based on 25% of Enhanced Capital Requirement (ECR), and an MMS Floor of 25% of ECR for Class C, D and E insurers; the minimum margin of solvency is removed from the solvency certificate and audit opinion scope for these classes.
• Comment period: Market participants are invited to submit comments on the proposals to policy@bma.bm by 15 November 2013.
• Proposed effective date: The Authority proposes that all amendments become effective from 1 January 2014, with the MMS Floor for Classes C, D and E specifically coming into operation on 1 January 2017.

As a consultation document, these are proposed rather than final requirements; the obligations described will only become binding once the Act and regulations are enacted as proposed.

Key obligations

• Interested parties should submit comments on the proposed amendments to policy@bma.bm by 15 November 2013.
• Once enacted, Class 3 insurers must comply with reporting requirements, obligations and responsibilities under sections 17, 18A and 30J aligned with those of Class 1 and Class 2 insurers.
• Once enacted, Class C and Class D insurers must comply with the requirements of section 6(5) of the Insurance Act.
• Once in force, Class 3A, Class 3B and Class 4 insurers must calculate a minimum margin of solvency floor (Figure D) as 25% of their reported ECR.
• Once in force (from 1 January 2017), Class C, D and E insurers must meet an MMS Floor of 25% of ECR under Schedule III of the Insurance Returns and Solvency Regulations.

Applies to

Class 1 insurers, 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

Deadlines

• 15th November: Deadline for market comments on the proposed Insurance Amendment (No.2) Act 2013 to be sent to policy@bma.bm.
• 1st January 2014: Proposed effective date for the Act and consequential regulatory amendments.
• 1 January 2017: Date the MMS Floor (25% of ECR) for Class C, D and E insurers comes into operation under the amended Schedule III of the Insurance Returns and Solvency Regulations.

Related documents

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