Response to Industry on the Insurance Amendment Act 2012 - Enhanced Enforcement Powers

Summary

This is the Bermuda Monetary Authority's written response to industry feedback on the draft Insurance Amendment Act 2012, which introduces enhanced enforcement powers for the Authority. It summarizes stakeholder concerns raised during consultation and sets out the Authority's position on each, ahead of the Bill coming into force.

• Public censure and publication: The Authority may publish statements about breaches or decisions to take regulatory action, following a warning notice and decision notice process, with no publication while an appeal is pending.
• Prohibition orders: The Authority can prohibit individuals (e.g. CEOs, directors, senior executives, underwriting, actuarial or risk management staff) from performing specified functions where they fail a fitness and propriety test; a right of appeal and right to apply for variation or revocation will apply.
• Civil penalties: The Authority may impose fines of up to $500,000 for failure to comply with requirements or contravention of prohibitions under the Insurance Act 1978, guided by principles of effectiveness, proportionality and dissuasiveness set out in a forthcoming Statement of Principles (SOP).
• Injunctions: The Authority may seek court orders to restrain or compel specific conduct by regulated entities.
• Directions in urgent cases: Directions to registered persons or designated insurers may be given without prior warning notice where urgency is found; the SOP will define what constitutes urgency.
• Investigations: The Authority may appoint inspectors to investigate any aspect of an insurer's or insurance group's business in the interests of policyholders, including access to proprietary information, subject to confidentiality protections under the Insurance Act 1978 and Bermuda Monetary Authority Act 1969.
• Minimum Criteria for Registration: The Authority confirms no change to the broad wording of criterion 1(1), meaning controllers and officers must be fit and proper for any activity carried on by the registered person, not just related activities.

The Authority states that the Bill will not come into force until its Statement of Principles is published, and that decision notices will only be issued after considering submissions made following a warning notice, generally within 90 days of that warning notice.

Applies to

insurers, insurance groups, registered persons under the Insurance Act 1978, designated insurers, controllers and officers of registered persons, individuals performing controlled functions (e.g. CEO, director, senior executive, underwriting, actuarial, risk management)

Deadlines

• 90 days after a warning notice: The Authority states it must reach a final decision (issue a decision notice) within 90 days after issuing a warning notice.