Notice - Insurance Code of Conduct (Revised) (2014-08-29)

Summary

This is a Bermuda Monetary Authority (BMA) consultation notice posting a revised Insurance Code of Conduct for industry comment. The Code sets out duties, standards and expected governance and conduct practices for (re)insurers registered under Section 4 of the Insurance Act 1978, and non-compliance is a factor the Authority considers when assessing whether an insurer is conducting business in a sound and prudent manner.

• Remuneration policy: Boards must adopt and implement a compensation policy aligned with the insurer's goals that does not incentivise behaviour contrary to the interests of the insurer and its stakeholders.
• Communication with the Authority: New processes are required to ensure effective and timely communication between the insurer and the BMA.
• Internal audit function: Internal audit must now be separate and independent from other functions within the insurer.
• Compliance function: Expanded detail clarifies the responsibilities and activities expected of the compliance function.
• Market discipline and disclosure: Revised guidance on the conduct expected of retail insurers toward policyholders and disclosure.
• Authorised intermediaries: Insurers must have a written contract in place with each authorised intermediary covering products, services, commissions, premium payment and responsibilities.
• Policy servicing: A new section governs insurers' conduct in servicing policy contracts and related obligations through to policy completion.

The Authority proposes that the revised Code come into effect on 1 January 2015, with insurers expected to achieve compliance by 1 July 2015. The BMA is inviting the financial services industry and other interested parties to comment on the proposals before finalisation.

Key obligations

• Interested parties should submit comments on the proposed revised Insurance Code of Conduct to policy@bma.bm by 31 October 2014
• Once effective, insurers' boards must adopt and implement a remuneration/compensation policy aligned with the insurer's objectives and stakeholder interests
• Once effective, insurers must establish processes ensuring effective and timely communication with the Authority
• Once effective, insurers must ensure the internal audit function is separate and independent from other functions
• Once effective, insurers must have a written contract in place with each authorised intermediary covering products, services, commissions, premium payment terms and responsibilities
• Once effective, insurers must have procedures to service policies through to satisfaction of all obligations and to handle complaints promptly, fairly and with documented records
• Insurers are expected to achieve full compliance with the revised Code by 1 July 2015

Applies to

insurers, reinsurers, (re)insurers registered under Section 4 of the Insurance Act 1978, authorised intermediaries, insurance managers

Deadlines

• 31st October 2014: Deadline for the financial services industry and other interested parties to submit comments on the proposed revised Code to policy@bma.bm
• 1st January 2015: The revised Insurance Code of Conduct is proposed to come into effect
• 1st July 2015: Established deadline for insurers to achieve compliance with the revised Code