Insurance Code of Conduct, Notice and Appendices

Summary

This is a 2011 BMA notice introducing the Insurance Code of Conduct, which sets out duties, requirements and standards for corporate governance, risk management and sound business practices that (re)insurers registered under Section 4 of the Insurance Act 1978 must observe. It explains how compliance will be assessed and provides sample board resolutions and a statutory declaration to help firms demonstrate compliance.

• Effective and compliance dates: The Code came into effect on 1 July 2010, with a compliance deadline of 1 July 2011; from that date the Authority incorporates Code compliance into its regular prudential supervision and on site review process.
• Annual board confirmation: Every registered (re)insurer must confirm with its annual statutory financial return that its board, assisted by management, has reviewed the Code and determined the company has complied, proportionate to the nature, scale and complexity of its operations.
• Statutory declaration: The Code requires signing and submission, with the annual statutory financial return, of a declaration by the Principal Representative and two directors (sample provided as Appendix III).
• Sample resolutions: Appendix I offers a sample board resolution for limited purpose (Class 1, 2 or 3 captive) (re)insurers; Appendix II offers a more comprehensive sample resolution and governance framework for commercial (re)insurers and more complex Class 3 captives.
• Record keeping: Board resolutions and supporting documentation evidencing compliance should be maintained by the Principal Representative and made available to the Authority upon request.
• Proportionality: The Authority will evaluate compliance proportionally to each company's nature, scale and complexity rather than prescribing a single method of demonstrating compliance.

The appendices are illustrative templates only; firms must tailor the resolutions and governance framework to their own operations rather than adopt them verbatim. Queries about the Code's requirements can be directed to the BMA's Director of Insurance Licensing and Authorisation.

Key obligations

• Registered (re)insurers must comply with the Insurance Code of Conduct by 1 July 2011.
• Every registered (re)insurer must confirm, with the submission of its annual statutory financial return, that its board (assisted by management) has reviewed the Code and determined the company has complied, based on the nature, scale and complexity of its operations.
• A statutory declaration of Code compliance, signed by the Principal Representative and two directors, must be submitted with the annual statutory financial return.
• Board resolutions and supporting documentation on Code compliance must be maintained by the Principal Representative and made available to the Authority upon request.
• The board and management should conduct a comprehensive review of the company's compliance with the Code, including its corporate governance and risk management framework, at least once a year.

Applies to

(re)insurers registered under Section 4 of the Insurance Act 1978, Class 1, Class 2 and Class 3 captive insurers, commercial (re)insurers

Deadlines

• 1st July 2011: Established deadline for compliance with the Insurance Code of Conduct.
• 1st July 2010: Date the Insurance Code of Conduct formally came into effect.
• with the annual statutory financial return: Deadline for board confirmation of Code compliance and submission of the statutory declaration by the Principal Representative and two directors.
• at least once a year: Recommended frequency for the board and management's comprehensive review of Code compliance and the governance/risk management framework.