Insurance Prudential Standard Stakeholder Letter (2022-03-24)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority summarising its responses to comments received during consultation on the Insurance (Prudential Standards) (Solvency Requirement) Amendment Rules 2022, which apply to Insurance Groups and Class 4, 3B, 3A, C, D and E insurers. It clarifies scope, withdraws one proposed requirement, and confirms implementation dates for new quarterly reporting and risk exposure schedule requirements.

• Quarterly return scope: Only commercial long-term Class D and E insurers are within scope of the quarterly return requirement (Paragraph 6A), unless the Authority gives additional instructions.
• CISSA quarterly requirement withdrawn: The proposal to require CISSA capital requirement details on a quarterly basis has been withdrawn based on market feedback and will not be implemented at this time.
• Catastrophe risk exposure: The amendment to include catastrophe risk exposure in quarterly returns takes effect Q1 2022; the Authority will communicate details of named events and thresholds in advance if applicable, and the section can be omitted if no event occurs.
• Schedule IV(f) risk exposure reporting: Insurers with subsidiaries must report the jurisdiction in which each subsidiary is licensed; insurers with no subsidiaries leave the column blank. Reporting a subsidiary's location separately from its underwriting risk location is acceptable.
• Implementation date: The quarterly return requirement and new Schedule IV(f) for Risk Exposure come into effect 1 July 2022; for 2021 year end, Schedule IV(f) should be provided on a best efforts basis.

Stakeholders with further questions on these clarifications are directed to contact the Authority at policy@bma.bm.

Key obligations

• Commercial long-term Class D and E insurers must provide the quarterly return under Paragraph 6A unless the Authority instructs otherwise.
• Insurers must include catastrophe risk exposure details in quarterly returns from Q1 2022 when a named catastrophe event occurs, using thresholds communicated by the Authority; the section may be omitted if no event occurs.
• Insurers must complete Schedule IV(f) Risk Exposure by providing the jurisdiction in which any subsidiaries are licensed, leaving the column blank if there are no subsidiaries.
• Insurers must comply with the new quarterly return and Schedule IV(f) Risk Exposure requirements from the 1 July 2022 implementation date.
• For the 2021 year end, insurers should provide Schedule IV(f) Risk Exposure information on a best efforts basis.

Applies to

Insurance Groups, Class 4 insurers, Class 3B insurers, Class 3A insurers, Class C insurers, Class D insurers, Class E insurers, commercial long-term Class D and E insurers

Deadlines

• Q1 2022: Effective date for including catastrophe risk exposure in quarterly returns.
• 1 July 2022: Implementation date for the quarterly return requirement and new Schedule IV(f) for Risk Exposure.
• 2021 year-end: Schedule IV(f) for Risk Exposure to be provided on a best-efforts basis for the 2021 year-end reporting.