Notice - Material Change Notification under Section 30JA(1) of the Insurance Act 1978 (2021-08-31)

Summary

This BMA notice explains the material change notification regime under Section 30JA(1) of the Insurance Act 1978, and provides guidance on when an insurer's expansion into a new line of business counts as a notifiable material change. It sets out both the statutory list of material changes and the Authority's own materiality thresholds for new lines of business.

• Statutory material changes: Section 30JA(1) lists changes requiring prior notification, including schemes of arrangement, amalgamation or acquisition of another firm, engaging in unrelated retail business, acquiring a controlling interest in non-insurance business serving non-affiliates, outsourcing all or substantially all actuarial, risk management, compliance or internal audit functions, outsourcing all or a material part of underwriting activity, transferring a whole line of business other than by reinsurance, expansion into a material new line of business, sale of the insurer, and outsourcing of an officer role.
• No-objection process: Under Section 30JB, an insurer may not effect a material change unless it has served written notice on the Authority and either received written no-objection or 30 days have elapsed without a written objection.
• Objection period under proposed Section 30JC: The notice states the Authority is to be given power to object to a notice within 14 days of receipt under the proposed section 30JC.
• Materiality test for new lines of business: An expansion into unrelated business not in the insurer's shared business plan is material if projected Gross Premium Written exceeds 20% of total unrelated business GPW, or capital allocated to it exceeds 20% of total statutory capital and surplus, or the insurer's board itself assesses the new line as significantly altering the insurer's risk profile (e.g. due to size or lack of expertise).
• Required filing contents: Where the materiality test is met, the insurer must file a formal notification with a cover letter describing the proposed business, any business plan changes, recent management accounts, board resolutions/minutes approving the new line, pro forma financial statements, a copy of the proposed insurance policy, and actuarial analysis supporting projected losses.

The Authority may also determine whether an insurer's registration needs updating as a result of a material change, particularly where the insurer's registration carries restrictions. Queries can be directed to insuranceinfo@bma.bm, and applications should be emailed to Authorisations_eApplications@bma.bm.

Key obligations

• Insurers must serve written notice on the BMA before effecting any change falling within the Section 30JA(1) list of material changes.
• Insurers must not effect a material change until the Authority has given written no-objection or 30 days have elapsed from service of the notice without a written objection.
• Insurers and designated insurers within a group must notify the Authority of an intended material change, with the Authority able to object within 14 days of receipt under the proposed Section 30JC.
• Where an expansion into a new line of business meets the stated materiality thresholds (GPW or capital allocation exceeding 20%, or board assessment of significant risk profile change), the insurer must file a formal notification pursuant to Section 30JA(1)(i) including a cover letter, business plan changes, recent management accounts, board resolutions, pro forma financial statements, the proposed insurance policy, and actuarial analysis.

Applies to

insurers, designated insurers within a group

Deadlines

• 30 days beginning with the date of service of the notice: Period within which the Authority must notify the insurer of no objection, or after which the insurer may proceed if no written objection has been served.
• 14 days of receipt: Period under the proposed Section 30JC within which the Authority may serve a written objection to a notified material change.