Guidance Note - Group Actuary's Opinion (Draft, June 2012)

Summary

This is a draft guidance note in which the Bermuda Monetary Authority sets out its expectations for the appointment, approval and role of a Group Actuary (GA), who opines annually on the adequacy of an insurance group's Insurance Reserves under the Insurance Act 1978 and the Insurance (Group Supervision) Rules 2011. It explains the fit and proper criteria, approval process, and the required content of the Group Actuary's Opinion (to replace the term 'Group Actuary's Certificate'), and proposes several new expectations beyond the existing Group Rules.

• Appointment and approval: A designated insurer of an insurance group must appoint a GA, subject to Authority approval, and must notify the Authority in writing of any change to application information within 30 days of becoming aware of it.
• Fitness and propriety: Insurance groups must assess candidates against fit and proper criteria before appointment and take timely steps to replace a GA who is no longer fit and proper.
• Annual opinion: The Group Actuary's Opinion must be provided annually with the group's Statutory Financial Return, addressing General Business and/or Long-Term Business Insurance Reserves.
• New proposed expectations: These include confirmation of continued good standing and Continuing Professional Development compliance, a Letter of Undertaking on direct board access, a commitment to provide a resignation letter, alignment of appointment with the group's accounting basis, disclosure of reliance on other actuaries' opinions, and commentary on risks of material adverse deviation.
• Terminology change: The term 'Group Actuary's Certificate' in the Group Rules is proposed to be renamed 'Group Actuary's Opinion', intended to take effect 31 December 2012 via an amendment to the Insurance (Group Supervision) Rules.

As a draft for consultation, the guidance itself does not yet bind industry; the Authority invited comments by 31 July 2012 before finalising the note and updating related Guidance Notes #3, #4, #9 and #10.

Key obligations

• A designated insurer of an insurance group must appoint a Group Actuary and obtain the Authority's approval of the appointment.
• The insurance group must notify the Authority in writing within 30 days of becoming aware of any change to information in a GA's application.
• The Group Actuary's Opinion must be provided annually together with the insurance group's Statutory Financial Return.
• If a GA is no longer fit and proper, the insurance group must take timely steps to replace them with a person meeting the eligibility and fit and proper criteria.
• The insurance group must provide information to the Authority on request to demonstrate that a GA candidate or incumbent meets the fit and proper criteria.
• Comments on the draft Guidance Note were to be submitted to the Authority by 31 July 2012.

Applies to

insurance groups, designated insurers, Group Actuaries (actuarial professionals)

Deadlines

• 31st July 2012: Deadline for industry comments on the draft Guidance Note, to be sent to Gina Smith or David Theaker at the BMA.
• 31st December 2012: Proposed effective date for the amendment to the Insurance (Group Supervision) Rules renaming 'Group Actuary's Certificate' to 'Group Actuary's Opinion' and for the proposed Section 26(6) amendment to the Insurance Act 1978.
• 30 days after becoming aware of a change: Insurance group must give written notice to the Authority of any change in information included in a Group Actuary application.