Guidance Note for Recovery Planning Requirements (2026-03-20)

Summary

This Guidance Note from the Bermuda Monetary Authority explains the BMA's expectations for insurers required to prepare a Recovery Plan under the Insurance (Prudential Standards) (Recovery Plan) Rules 2024, which became operative on 1 May 2025. It is not itself a set of binding rules but interprets and supplements those Rules, covering scope, proportionality, governance, and the key content expected in a Recovery Plan.

Applicability is determined by the BMA on a case by case basis, having regard to an insurer's nature, scale, complexity, whether its failure could threaten Bermuda's financial stability, and whether it is under enhanced supervisory monitoring. Insurers within scope receive formal written notice from the Authority specifying a deadline to file their Recovery Plan.

Key guidance areas

• Scope and proportionality: The level of detail in a Recovery Plan should be proportionate to the insurer's scale and complexity; the Authority may permit phased development, alignment with existing tools, or reduced update frequency.
• Group recovery plans: A Bermuda insurer included in a group-wide Recovery Plan may apply in writing to the Authority for approval to adopt that plan instead of preparing a separate entity-level plan, providing a copy of the group plan and a rationale assessment.
• Ownership and accountability: Recovery planning must be owned by the insurer and integrated into its ERM framework; outsourcing development work does not remove board and senior management accountability.
• ERM integration: Recovery Plans should be embedded in the insurer's ERM framework, using existing tools such as risk appetite, capital management, and contingency plans as inputs, while remaining distinct from and more holistic than the CISSA.
• Key elements of a Recovery Plan: Plans should be periodically tested and updated, and include trigger frameworks, governance arrangements, recovery options, and a communication plan covering internal and external stakeholders.
• Communication with the Authority: Insurers are expected to notify the BMA in anticipation of a likely trigger breach, immediately upon breach, upon activation of the plan, periodically during implementation, and upon successful exit from the recovery zone.

Insurers should treat recovery planning as a substantive management exercise rather than a compliance formality, and should maintain management information systems capable of producing recovery-relevant information promptly, making outputs available to the BMA upon request.

Key obligations

• Insurers notified by the BMA that they are within scope of the Recovery Plan Rules must prepare and file a Recovery Plan by the deadline specified in the Authority's notice.
• Insurers seeking to rely on a group Recovery Plan instead of preparing a separate entity-level plan must submit a written application to the BMA, accompanied by a copy of the group plan and an assessment of its appropriateness for the Bermuda insurer.
• Insurers must maintain management information systems capable of producing recovery plan relevant information on a timely basis and make such outputs available to the BMA upon request.
• Where individual entity Recovery Plans cross-reference a Group Recovery Plan without sufficient detail, insurers must provide the BMA access to, and allow review of, the relevant sections of the Group Recovery Plan upon request, within a reasonable period.
• Insurers must periodically test and update their Recovery Plan, including in the event of material internal or external changes.
• The Communications Plan within the Recovery Plan must specify when the BMA will be notified, including in anticipation of a likely trigger breach, immediately upon breach, upon plan activation, periodically during implementation, and upon successful exit from the recovery zone.
• Senior management and the board remain accountable for the development, maintenance and implementation of the Recovery Plan even where its preparation is outsourced.

Applies to

insurers, commercial insurers, insurers that are parent entities of an international group, Bermuda insurers within a supervised group

Deadlines

• 1 May 2025: Date on which the Insurance (Prudential Standards) (Recovery Plan) Rules 2024 became operative.
• deadline specified in the Authority's notice: Insurers within scope of the Rules must file their Recovery Plan with the Authority by the deadline set out in the formal notice received from the BMA.