Stakeholder Letter - Consultation Paper - Proposed Enhancements to the Insurance Group Supervision Framework (2025-05-06)

Summary

This is a stakeholder letter from the BMA summarising industry feedback on its December 2024 Consultation Paper on Proposed Enhancements to the Insurance Group Supervision Framework, and setting out the Authority's responses and resulting amendments to the proposals. It does not itself create binding rules; it explains how the BMA intends to amend the Insurance Act 1978 and related rules following consultation.

• Mandatory group supervision: Confirms group supervision will be mandatorily triggered only where the ultimate parent is a Bermuda body corporate (not itself a subsidiary) heading an insurance group, or the group is headed by a Bermuda specified insurer; other cases assessed case by case.
• Designated insurer retained: The BMA has decided to keep the designated insurer as the primary supervisory mechanism, rather than replacing it with a designated insurance holding company as originally proposed.
• Designated insurance holding company as backstop: A designated insurance holding company will only be used where supervision through the designated insurer is determined ineffective (per section 27E functions or section 32(1) conditions), with notice and representation rights for affected entities.
• Insurance holding company definition narrowed: The definition of insurance holding company is amended to remove the words 'or registered', excluding permit companies from scope.
• Direct powers: Where a designated insurance holding company is used, the same enforcement powers currently applied to designated insurers (injunctions, penalties, objections to officers/controllers, winding-up petitions) will apply to it, applied proportionately.
• Material change notifications: Pre-approval will be required only for amalgamations with, or acquisitions of, another firm; for overseas transactions, notification to the Authority is required within 30 days of the transaction taking effect.
• Transitional period: The BMA proposes a 12 month transition period from the date of assent of the legislative amendments for impacted groups to achieve full compliance, with case by case flexibility for additional time.
• IAIGs: For Internationally Active Insurance Groups, supervision will be applied through the Head of the IAIG (which may be an insurance holding company), with separate requirements to follow.

The letter indicates the BMA will proceed to amend the Insurance Act 1978, the Insurance (Group Supervision) Rules, and the Third and Fifth Schedules of the Bermuda Monetary Authority Act 1969, and will issue further guidance on material change notification thresholds and IAIG requirements.

Key obligations

• Once enacted, designated insurance holding companies (where designated) will be subject to the same ongoing regulatory obligations, and supervisory/enforcement powers, currently applicable to designated insurers
• Amalgamation with, or acquisition of, another firm by a designated insurer or designated insurance holding company will require advance notice to and pre-approval from the BMA
• For overseas amalgamation, merger or acquisition transactions, the designated insurer must notify the BMA within 30 days of the transaction taking effect
• Impacted insurance groups must complete transition to the amended framework within the proposed 12 month transition period from the date of assent, absent BMA agreement to additional time
• Entities subject to a proposed designation as, or withdrawal of, group supervisor, or designation of an insurance holding company, may make written representations to the BMA within the time specified in its notice

Applies to

insurance groups, designated insurers, designated insurance holding companies, insurance holding companies, Bermuda specified insurers, Internationally Active Insurance Groups (IAIGs)

Deadlines

• 12 months from the date of assent: Proposed transition period for impacted insurance groups to achieve full compliance with the amended group supervision framework
• within 30 days of the material change transaction taking effect: Designated insurer's obligation to notify the BMA of overseas amalgamation, merger or acquisition transactions