Guidance Note for Recovery Planning Requirements (Tracked Changes Version)

Summary

This Guidance Note from the Bermuda Monetary Authority explains the Authority's expectations for insurers subject to recovery planning requirements under the Insurance (Prudential Standards) (Recovery Plan) Rules 2024, which became operative on 1 May 2025. It sets out how the Authority determines which insurers must maintain a Recovery Plan, how proportionality is applied, and what a compliant Recovery Plan should contain.

• Scope: Applies to insurers designated by the BMA based on nature, scale, complexity, potential threat to Bermuda's financial stability, and whether the insurer is under enhanced supervisory monitoring; designated insurers receive a formal notice specifying a filing deadline for their Recovery Plan.
• Proportionality: The Authority may permit phased development, alignment with existing tools, adjusted update frequency, or less frequent trigger monitoring depending on the insurer's complexity.
• Group plans: A Bermuda insurer covered by a group-wide Recovery Plan may apply in writing to adopt that plan instead of preparing a separate entity-level plan, subject to BMA approval; combined plans covering multiple entities may also be approved.
• ERM integration: Recovery planning should be embedded in the insurer's Enterprise Risk Management framework, with trigger frameworks and governance aligned to existing risk appetite and ERM structures, and distinguished from the CISSA process.
• Ownership and accountability: Recovery planning must be owned by the insurer even where development is outsourced; senior management and the board remain accountable and cannot outsource accountability.
• Key elements of a Recovery Plan: Should include credible recovery options for a range of severe stress scenarios, trigger frameworks, governance arrangements, testing (including simulations/dry runs), and a communication plan covering internal and external stakeholders.
• Notification to BMA: Insurers are expected to notify the Authority in anticipation of a likely trigger breach, immediately upon an actual breach, upon activation of the Recovery Plan, periodically during activation, and upon successful exit from the recovery zone.

This is guidance rather than binding rules in itself; the substantive legal obligations derive from the Insurance (Prudential Standards) (Recovery Plan) Rules 2024, and this document should be read alongside those Rules. Deadlines for individual insurers to file a Recovery Plan are set on a case by case basis via formal notice from the Authority rather than a fixed date in this Guidance Note.

Key obligations

• Insurers designated by the BMA as within scope must prepare and file a Recovery Plan with the Authority by the deadline specified in the Authority's formal notice.
• Insurers relying on a group Recovery Plan must submit a written application to the BMA for approval to adopt the group plan, accompanied by a copy of the plan filed with the relevant supervisory authority 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 must make outputs available to supervisors upon request.
• Insurers must ensure senior management and the board retain accountability for the Recovery Plan even where its development is outsourced, and must comply with their outsourcing policy when outsourcing recovery planning activities.
• Insurers must align individual entity Recovery Plans with Group Recovery Plans where both exist, ensuring consistency of recovery options, indicator frameworks and governance structures.
• Insurers must notify the BMA in anticipation of a likely trigger breach, immediately upon an actual trigger breach, upon activation of the Recovery Plan, periodically during activation, and upon successful exit from the recovery zone.
• Insurers should conduct regular testing, such as simulations or dry runs, of their Recovery Plan's escalation processes, crisis management team functioning, and communication strategies.

Applies to

insurers, commercial insurers, Bermuda insurers that are part of an international group

Deadlines

• 1 May 2025: Date the Insurance (Prudential Standards) (Recovery Plan) Rules 2024 became operative.
• deadline specified in Authority's notice: Insurers within scope of the Rules will receive a formal notice from the BMA specifying the deadline by which they must file their Recovery Plan.