Response to Industry Comments - Insurance Code of Conduct (revised) 2014 (2014-12-05)

Summary

This is a letter from the Bermuda Monetary Authority summarising and responding to industry feedback received on the revised Insurance Code of Conduct that was published for consultation on 29 August 2014. It is not itself a binding rule but explains how the Authority addressed stakeholder concerns and what changes it made to the Code as a result.

• Internal audit independence: The Authority removed the requirement for independently staffed internal audit functions, meaning dedicated separate staff are no longer required, but insurers must still be able to demonstrate the independence of the internal audit function.
• Proportionality: Insurers concerned about specific Code requirements, including internal audit, are encouraged to approach the BMA directly to discuss their circumstances, since application of the Code depends on nature, scale and complexity.
• Definition alignment: The definition of Internal Audit in the Code has been amended to align with its use in the Group Rules 2011.
• Group wording restored: The Authority will revert to the clearer group conscious wording from the original Code regarding non executive directors from a parent board.
• Compliance and internal audit interaction: The Authority confirmed that the compliance function and internal audit function may work jointly on projects, and that internal audit has a role in reviewing internal controls.

Overall, the letter is informational and explanatory rather than imposing new standalone obligations; it clarifies how the revised Insurance Code of Conduct 2014 will be applied and amended following industry consultation.

Key obligations

• Insurers must be able to demonstrate the independence of their internal audit function even though dedicated separate staffing is no longer required.

Applies to

insurers