Insurance Act 1978 - Statement of Principles (June 2007)

Summary

This is the Bermuda Monetary Authority's Statement of Principles issued under section 2A of the Insurance Act 1978. It explains how the Authority interprets and applies the minimum criteria for registration, the grounds for cancelling a registration, its power to impose conditions or give directions, and its powers to obtain information and require production of documents from registered persons. It does not create new statutory obligations but sets out the Authority's approach to exercising existing statutory powers.

• Fit and proper controllers and officers: The Authority assesses whether controllers and officers (including directors, senior executives and shareholder controllers) are fit and proper, having regard to competence, soundness of judgment, diligence and probity.
• Four eyes requirement: Business must be effectively directed by at least two individuals who both engage in all significant decisions, not merely one dominant person.
• Board composition: Registered bodies corporate must include such non-executive directors as appropriate given the nature and scale of their business, supporting governance oversight.
• Prudent conduct of business: Registered persons must meet specific prudential sub-criteria under the Minimum Criteria for Registration, assessed proportionately to size, nature, complexity and risk profile.
• Consolidated supervision: Where relevant, the Authority considers group-wide arrangements and consolidated supervision in assessing compliance with minimum criteria.
• Information and reporting powers: Insurers must provide the Authority with a statutory financial return as prescribed, and may be required to supply additional information, reports (including from appointed professionals), or produce documents under sections 29A and 29B of the Act.
• Cancellation, conditions or directions: The Authority may cancel a registration, impose conditions, or give directions where minimum criteria are not met or grounds under sections 41 and 42 arise, generally preferring remedial measures where a viable path to compliance exists.

The Principles apply generally to all persons registered under the Insurance Act 1978 and are subject to revision over time; any material change must be published in the same manner as the original Principles.

Key obligations

• Registered persons must ensure all controllers and officers are fit and proper on an ongoing basis.
• At least two individuals must effectively direct the business of a registered person (the four eyes requirement), with both engaged in all significant decisions.
• Bodies corporate that are registered persons must include an appropriate number of non-executive directors having regard to the nature and scale of their business.
• Registered persons must conduct their business in a prudent manner, fulfilling the specific sub-criteria set out in the Schedule to the Act.
• Insurers must provide the Authority with a statutory financial return as prescribed under the Act.
• Registered persons must comply with notices under section 29A requiring information, reports or appointment of a professional person to prepare a report, and with section 29B requiring production of documents.
• Where the Authority makes a material change to the Principles, it must publish the change or a revised version in the same manner as the original publication.

Applies to

registered persons under the Insurance Act 1978, insurers, controllers, officers, shareholder controllers, directors

Related documents

• This document is made under Insurance Act 1978