Insurance (Prudential Standards) (Class 3A Solvency Requirement) Amendment Rules 2012

Summary

This notice announces final amendments to the Insurance (Prudential Standards) (Class 3A Solvency Requirement) Rules 2011, addressing housekeeping matters identified by the BMA after a June 2012 consultation drew no industry comments. The amendments regularize an existing market expectation around signing of solvency returns and align the Rules with the Authority's online filing model, including revised capital adequacy schedules.

• Declaration requirement: Inserts a new paragraph 6A requiring every capital and solvency return filed under paragraph 6 to be accompanied by a declaration signed by two directors and the insurer's principal representative confirming the return fairly represents the insurer's financial condition.
• Schedule I revoked and replaced: Sets out a revised Bermuda Solvency Capital Requirement for Small and Medium-Sized Entities (BSCR-SME) formula, including updated capital charge factors for fixed income, equity, interest rate/liquidity, premium, reserve, credit, catastrophe and operational risk components.
• Schedules VI, VII, VIII and X amended or replaced: Amends Schedule VI (minor drafting change) and revokes and replaces Schedules VII, VIII and X to reflect changes to the Authority's online capital and solvency return filing model and to ensure consistency with the law.
• New definition added: Inserts a definition of policyholder obligations into paragraph 2 of the principal Rules, tied to specific lines of Form 1A under the Insurance Accounts Regulations 1980.

The Authority states these amendments are final unless substantive policy issues are later identified, and they take effect on 1 January 2013.

Key obligations

• Every capital and solvency return filed under paragraph 6 must be accompanied by a declaration signed by two directors of the insurer and by the insurer's principal representative attesting that the return fairly represents the insurer's financial condition.
• Insurers must calculate their Bermuda Solvency Capital Requirement using the revised BSCR-SME formula and capital charge factors set out in the replaced Schedule I.
• Insurers must complete and submit returns using the revised Schedules VI, VII, VIII and X as amended or replaced by these Rules.

Applies to

Class 3A insurers, commercial insurers registered under the Insurance Act 1978

Deadlines

• 1 January 2013: Commencement date on which the Amendment Rules come into operation and the revised solvency requirement, declaration requirement, and schedules take effect.

Related documents

• This document is made under Insurance Act 1978