Notice Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Amendment Rules 2012 (2012-11-14)

Summary

This is a Bermuda Monetary Authority notice announcing final amendments to the Insurance (Prudential Standards) (Class E Solvency Requirement) Rules 2011, retitled to also cover Class C and Class D insurers. The notice explains housekeeping changes made after industry consultation and confirms the amended Rules come into force on 1 January 2013.

• Scope extension: The principal Rules (previously applicable only to Class E insurers) are amended to also apply to Class C and Class D insurers for BSCR and solvency return purposes.
• CISSA sign-off removed: The board is no longer required to formally sign off on the Commercial Insurer's Solvency Self-Assessment (CISSA), but must still review the CISSA annually and review any material changes, per the Code of Conduct.
• Schedule updates: Schedules I, IX and XII to the principal Rules are revoked and replaced, and a new Schedule XIII (Class C BSCR and capital/solvency return) is inserted, to align with the Authority's online filing model.
• Return filing requirement: Every Class D and Class E insurer must make a capital and solvency return per Schedules IX and XII; every Class C insurer must make a capital and solvency return in accordance with new Schedule XIII.
• Enhanced capital and solvency phase-in delayed: Enhanced capital and solvency requirements (paragraph 3 of the Rules) are pushed back so that compliance is not required until 1 January 2014, with a three-year phase-in for Class C, Class D and Class E insurers.
• Commencement: The Amendment Rules come into operation on 1 January 2013.

The Authority states the amendments are final unless substantive policy issues are later identified for review or revision.

Key obligations

• Every Class C insurer must make a capital and solvency return in accordance with Schedule XIII.
• Every Class D and Class E insurer must make a capital and solvency return in accordance with Schedules IX and XII.
• The board must review the CISSA annually and review any material changes to it, even though formal board sign-off on the CISSA is no longer required.
• No person is required to comply with paragraph 3 (enhanced capital and solvency/BSCR model requirements) until 1 January 2014, phased in over a three-year period thereafter for Class C, Class D and Class E insurers.
• Insurers must use the Class C, Class D and Class E BSCR models set out in the revised Schedule I to calculate their Class C, Class D or Class E BSCR.

Applies to

Class C insurers, Class D insurers, Class E insurers

Deadlines

• 1 January 2013: Commencement date of the Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Amendment Rules 2012.
• 1 January 2014: Deadline by which Class C, Class D and Class E insurers must begin complying with paragraph 3 (enhanced capital and solvency/BSCR model requirements), phased in over three years thereafter.
• annually: The board must review the insurer's CISSA and review any material changes to it at least annually.