Insurance Group Supervision Statement of Principles (June 2012)

Summary

This is a Statement of Principles issued by the Bermuda Monetary Authority (Authority) in June 2012, explaining how it will exercise its statutory powers and discretion as Group Supervisor under Part IVA of the Insurance Act 1978. It sets out the criteria the Authority uses to decide whether to act as group supervisor, how it defines the scope of a supervised group, and how it will use its information-gathering, capital-adjustment and direction-issuing powers.

• Determination as Group Supervisor: The Authority considers factors such as whether the group is headed by a Bermuda-incorporated specified insurer or parent, and whether the group is directed and managed from Bermuda, before assuming the group supervisor role.
• Scope of supervision: Once appointed Group Supervisor, the Authority identifies which group members fall within scope, and may add or exclude members under sections 27C and 27CA of the Act.
• Information and reports: The Authority expects groups to provide information largely on a voluntary basis, but can compel production of information, reports or documents from a Designated Insurer under section 29A, or commission independent professional reports under section 29B.
• Capital adjustments: Under section 6D, the Authority may adjust a group's enhanced capital requirement (ECR) or available statutory capital and surplus where risk profile or governance deviates significantly from applicable standards; any such adjustment takes effect only after a notice period.
• Directions to Designated Insurer: Under section 32A, the Authority may issue directions to a Designated Insurer to safeguard policyholders or address breaches of the Act or Group Rules, generally following a structured escalation process (discussion, remedial plan, then formal direction if unremediated).

The document is explanatory guidance on the Authority's approach rather than new legislation; the underlying legal obligations arise from the Insurance Act 1978 (as amended) and the Insurance (Group Supervision) Rules 2011 and related Prudential Standards Rules, which this Statement of Principles interprets.

Key obligations

• Insurance groups and Designated Insurers must make mandatory filings required by the Act and the Group Rules.
• A Designated Insurer must comply with a notice issued under section 29A of the Act compelling provision of information, reports or documents.
• A Designated Insurer must cooperate with reports commissioned from professional persons (auditors or actuaries) under section 29B where the Authority has concerns about information accuracy or completeness.
• A Designated Insurer must comply with any direction issued under section 32A of the Act to remediate a breach or safeguard policyholder interests.
• A Designated Insurer may make written representations within a period specified in a notice before the Authority finalises a designation, capital adjustment, or direction decision.

Applies to

insurance groups, Designated Insurer, registered insurers, reinsurers

Deadlines

• not less than 90 days from the date of notification: A capital adjustment made by the Authority to a group's ECR or available statutory capital and surplus does not take effect until at least 90 days have elapsed from the date of notification.

Related documents

• This document is made under Insurance Act 1978