Information Bulletin - Waivers and Modifications to Sections 15A and 17A of the Insurance Act 1978, and the Insurance (Public Disclosure) Rules 2015 (December 2016)

Summary

This is a Bermuda Monetary Authority guidance bulletin explaining how it will exercise its discretion under Sections 56 and 6C of the Insurance Act 1978 to grant waivers or modifications of public disclosure obligations for commercial insurers. It covers the Declaration of Compliance (Section 15A), additional GAAP financial statements (Section 17A), and the Financial Condition Report (FCR) requirements under the Insurance (Public Disclosure) Rules 2015. The bulletin lists illustrative, non-exhaustive scenarios where the Authority would consider relief, but each request is assessed case by case and approval is never automatic.

Section 17A GAAP statement relief

• Group filings: Insurer supervised on a group-wide basis by the Authority may file consolidated group GAAP statements if disclosures do not materially differ.
• Dormant or in liquidation: May apply for a waiver from Section 17A if not conducting insurance business.
• Pre-commencement: Waiver may be granted if the insurer confirms it wrote no business in the year and states its expected commencement date.
• Run-off: GAAP waiver possible if producing audited GAAP statements would significantly impact ability to meet policyholder obligations (excludes run-off specialists).
• Competitive disadvantage: Does not itself qualify for a filing waiver, but publication may be waived if the insurer demonstrates competitive harm.
• 100% affiliated business: Publication of GAAPs may be waived since cedants already have the information, unless there is significant external stakeholder interest.
• Branches: May file the parent's audited consolidated financial statements instead, which will be published.
• Alternative filings: Insurers filing comparable information with a securities exchange or another supervisor may use that in lieu of Section 17A filings if it meets equivalent transparency objectives.

Section 15A Declaration of Compliance relief

• Liquidation: Insurers in liquidation or provisional liquidation may be exempted from the Section 15A filing requirement.

FCR modifications and waivers under the Public Disclosure Rules

• Capital Management section: No waiver from this FCR section will be given except where the insurer is in liquidation or provisional liquidation.
• Competitive disadvantage: Waiver considered only if the insurer satisfies the Authority that FCR publication causes competitive harm.
• Contractual confidentiality: FCR must still be completed, but specific information may be waived if a contractual confidentiality obligation is evidenced.
• Legal conflict: Where disclosure would breach overseas law or a regulatory direction, the Authority will seek an alternative that still meets disclosure objectives.
• Closed group/mutuals: Waiver possible where ultimate policyholders are owners with access to comparable information directly.
• Group Supervisor cases: Waiver possible if the insurance group's FCR already gives information specific and appropriate to the individual insurer.
• Other regulator filings: Insurers with comparable disclosure obligations to other regulators (e.g. the SEC) must submit a comparison showing all FCR disclosure requirements are satisfied in some form.

Key obligations

• An insurer seeking a Section 17A GAAP waiver on pre-commencement grounds must confirm it has not written any business in the relevant financial year and state its expected commencement date.
• An insurer relying on a jurisdictional legal conflict for FCR relief must work with the Authority to find a disclosure solution that avoids breaching applicable law or supervisory directions.
• An insurer seeking FCR relief based on comparable filings with another regulator (e.g. the SEC) must submit an application including a comparison of required FCR disclosures against the information it proposes to file instead.
• An insurer relying on contractual confidentiality for FCR relief must provide evidence confirming the contractual obligation to keep the relevant information confidential.
• An insurer must otherwise complete the FCR in full where no waiver has been granted, including the Capital Management section unless in liquidation or provisional liquidation.

Applies to

commercial insurers, Class 3A insurers, Class C insurers, Class D insurers, Class E insurers, insurance groups, branches of insurers