Stakeholder Letter - Consultation Paper - Recovery Planning (2022-10-11)

Summary

This is a Bermuda Monetary Authority (BMA) stakeholder letter responding to industry feedback on its June 2022 Consultation Paper proposing a new recovery planning regime for the insurance sector. It clarifies the Authority's intended approach on several points raised by stakeholders but does not itself create binding rules; those rules and accompanying guidance notes are still to be developed and will be subject to further public consultation.

• Scope: The proposed regime applies only to Bermuda commercial insurers: Class 3A, 3B, 4, C, D and E insurers, and insurance groups. Domestic insurers and exempted companies under section 127 of the Companies Act 1981 are excluded.
• Proportionality: The Authority will apply the IAIS proportionality principle in deciding whether a recovery plan is required and in setting its frequency, form, content and level of detail, considering factors such as class of registration, size, interconnectedness, complexity and risk profile.
• Group recovery plans: Where a subsidiary is covered by a group-wide recovery plan filed with a group supervisor elsewhere, the Authority will generally defer to that plan unless there are material concerns, rather than requiring a separate entity-level plan.
• Triggers: Insurers remain responsible for developing their own recovery plan trigger frameworks reflecting their risk profile, with trigger points for plan activation expected to be set above minimum regulatory requirements.
• Governance: The Authority expects each insurer's board of directors to give final approval of the recovery plan, with clear documentation of roles and responsibilities for developing, reviewing, testing, monitoring and activating the plan.
• Relationship to CISSA: Where a standalone recovery plan is required it should be prepared separately from the CISSA, though insurers may draw on existing ERM tools; where only recovery planning measures (not a formal plan) are required, these may be incorporated into the CISSA.
• Future guidance: Once recovery planning rules are finalised, the Authority intends to issue further guidance on practical implementation, which will itself be subject to public consultation.

No specific deadlines or commencement dates are set out in this letter; it is a consultative response document ahead of finalised rules and future guidance.

Applies to

Bermuda commercial insurers (Class 3A, 3B, 4, C, D, E), insurance groups