Insurance (Prudential Standards) (Class 4 and Class 3B Solvency Requirement) Amendment Order 2010

Summary

This Order amends the Insurance (Prudential Standards) (Class 4 Solvency Requirement) Order 2008 to extend its solvency and risk disclosure requirements to Class 3B insurers alongside Class 4 insurers, and to introduce new risk definitions and reporting schedules. It came into operation on 31 December 2010.

• Scope extension: Wherever the principal Order referred only to Class 4 insurers (paragraphs 3, 5, 6, and Schedules V and VI), it is amended to also capture Class 3B insurers.
• New risk definitions: Inserts defined terms for catastrophe risk, concentration risk, credit risk, group risk, legal risk, liquidity risk, market risk, operational risk, premium risk, reputational risk, reserve risk and strategic risk into the principal Order's interpretation section.
• Schedule V changes: Amends the Schedule of Risk Management to remove certain paragraphs, revise disclosure of statutory lines/territories with catastrophe exposure, projected net premiums written, underwriting profit or loss, net income or loss, and require loss triangles by broad line of business grouping.
• New Schedule VII (CISSA): Adds a Schedule of Commercial Insurer's Solvency Self Assessment (CISSA) requiring capital summary tables, general governance and risk appetite questions, and qualitative/quantitative assessment tables for catastrophe, reserve, premium, market, credit, liquidity, operational, group, reputational and strategic risk.
• New Schedule VIII: Adds further detailed reporting tables (including terrorism exposure and loss scenario tables, reinsurance terrorism limits, and assumed exchange rates) that affected insurers must complete as part of their return.

In practice, Class 4 and Class 3B insurers must now prepare and file the expanded CISSA and related risk disclosure schedules as part of their regulatory returns to the Bermuda Monetary Authority, in addition to complying with the amended risk management and solvency disclosure requirements.

Key obligations

• Class 4 and Class 3B insurers must complete and submit the new Schedule VII (CISSA) as part of their statutory returns, including capital summary tables and qualitative/quantitative risk assessments for catastrophe, reserve, premium, market, credit, liquidity, operational, group, reputational and strategic risk.
• Class 4 and Class 3B insurers must comply with the amended Schedule V risk management disclosure requirements, including revised catastrophe exposure, premium/underwriting/net income disclosures, and loss triangle reporting by line of business.
• Class 4 and Class 3B insurers must complete new Schedule VIII reporting tables (e.g. terrorism exposure, loss scenarios, reinsurance terrorism limits, assumed exchange rates) where applicable.
• The CISSA return must be reviewed and approved by the insurer's Board of Directors before submission.

Applies to

Class 4 insurers, Class 3B insurers

Deadlines

• 31st day of December 2010: Commencement date of the Amendment Order

Related documents

• This document is made under Insurance Act 1978