Notice - Insurance Returns and Solvency Regulations 1980 and Insurance Accounts Regulations 1980 (2013-07-01)

Summary

This is a Bermuda Monetary Authority (BMA) consultation notice dated 1 July 2013 proposing amendments to the Insurance Returns and Solvency Regulations 1980 (IRSR) and the Insurance Accounts Regulations 1980 (IAR). It sets out draft changes to solvency margin calculations, balance sheet reporting forms, and actuarial reserving instructions, and invites industry comment before the amendments are finalised.

• New minimum margin of solvency (MMS) floors: Proposed new MMS floors for Class 4, 3B and 3A insurers (based on enhanced capital requirement, via a new Figure D) and for Class C, D and E insurers (25% of ECR), the latter proposed to take effect on 1 January 2017.
• Regulation 8A clarification: Confirms Regulation 8A's certificate/opinion requirements also apply to Classes 3A, 3B and 4 insurers.
• Actuary's certificate (Regulation 14): Proposed replacement of Regulation 14 to standardise how approved actuaries and loss reserve specialists submit certificates and opinions to the Authority.
• Balance sheet form changes (Schedule I, Forms 4 and 6): Line 4 (investments in affiliates) to be replaced with more granular categories; Line 13 (segregated accounts companies) to be split into variable annuity related and other segregated accounts.
• Reserving instructions (Schedule III): Paragraphs 23 and 26 amended to require long term business reserves to be both actuarially computed and adequate, rather than only actuarially computed.
• Public comment period: Comments on the proposed Regulations were invited by 6 September 2013, to be sent to policy@bma.bm.

The notice states that, if adopted, the amendments were proposed to become effective on 1 January 2014, with the Class C, D and E MMS floor provisions proposed to come into operation on 1 January 2017. As a consultation document, it does not itself impose binding obligations, but signals forthcoming regulatory changes for affected insurers.

Key obligations

• Interested parties were required to submit comments on the proposed amendments to policy@bma.bm by 6 September 2013.
• Once adopted, Class 4, 3B and 3A insurers would need to meet a new minimum margin of solvency floor based on 25% of their enhanced capital requirement (Figure D).
• Once adopted, Class C, D and E insurers would need to meet a minimum margin of solvency floor of 25% of ECR, effective from 1 January 2017.
• Once adopted, approved actuaries and loss reserve specialists would need to submit certificates/opinions in the manner prescribed by the revised Regulation 14.
• Once adopted, long term business insurers' reserves under Schedule III paragraphs 23 and 26 would need to be both actuarially computed and adequate.

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, long-term business insurers, composite insurers, special purpose insurers, approved actuaries, loss reserve specialists

Deadlines

• 6th September 2013: Deadline for submitting comments on the proposed amendments to the IRSR and IAR to policy@bma.bm.
• 1st January 2014: Proposed effective/commencement date for the amendments to the IRSR and IAR.
• 1st January 2017: Proposed date the minimum margin of solvency floor provisions for Class C, D and E (and related Class 4, 3B, 3A) insurers come into operation.

Related documents

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