Insurance (Prudential Standards) (Recovery Plan) Rules 2024

Summary

These Rules, made by the Bermuda Monetary Authority under the Insurance Act 1978, set out when and how certain insurers must prepare, correct and update a recovery plan designed to show how they would recover from severe stress scenarios. They came into force on 1 May 2025.

• Who may be required to prepare a plan: The Authority decides whether an insurer must prepare a recovery plan having regard to factors such as domestic business activity, three year rolling average total assets of at least $10 billion, three year rolling average gross written premiums of at least $5 billion, and whether the insurer is subject to enhanced supervisory monitoring.
• Scope and content: Where a plan is required, its scope, frequency, form and level of detail are set by the Authority based on the insurer's class of registration, size, interconnectedness, complexity, business model, risk profile, substitutability and cross border activities. The plan itself must contain an executive summary, a description of the insurer's legal structure and operations, recovery trigger criteria, governance arrangements, recovery methods, stress scenarios and a stakeholder communication strategy.
• Adopting a group or overseas plan: An insurer notified to prepare a plan may instead apply to adopt a recovery plan it has already filed with an overseas or group-wide supervisory authority, subject to the Authority's written approval that it meets the Rules' requirements.
• Corrections and updates: Insurers must correct any deficiencies the Authority identifies within the time set out in its written notice, and must review and update their recovery plan at least every three years or sooner if there is a material change in financial position, strategy, business or risk profile, filing the updated plan within 30 days.

The Rules apply to Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurers and to insurance groups, but only trigger obligations once the Authority issues a written notice requiring preparation, correction or updating of a plan.

Key obligations

• An insurer notified by the Authority must prepare, correct or update a recovery plan within the time specified in the notice.
• A recovery plan prepared under the Rules must include an executive summary, a description of the insurer's legal structure, business, financial arrangements and operations, recovery trigger criteria, governance policies, recovery methods, stress scenarios, and a stakeholder communication strategy.
• An insurer wishing to adopt a plan filed with a relevant overseas supervisory authority must apply in writing to the Authority with a copy of that plan and obtain approval before relying on it.
• An insurer notified of deficiencies in its recovery plan must address those deficiencies within the time specified in the notice.
• An insurer must review and update its recovery plan at least once every three years, or sooner upon a material change in its financial position, strategy, business or risk profile.
• An updated recovery plan must be filed with the Authority within 30 days of being updated.

Applies to

Class 3A insurers, Class 3B insurers, Class 4 insurers, Class C insurers, Class D insurers, Class E insurers, insurance groups

Deadlines

• 1 May 2025: Commencement date of the Insurance (Prudential Standards) (Recovery Plan) Rules 2024.
• within the time specified in the Authority's notice: Deadline for an insurer to prepare, correct or update a recovery plan, or to address identified deficiencies, after being notified in writing by the Authority.
• at least once every three years: Minimum frequency for an insurer to review and update its recovery plan, or sooner if there is a material change in its financial position, strategy, business or risk profile.
• within 30 days of being updated: Deadline to file an updated recovery plan with the Authority.

Related documents

• This document is made under Insurance Act 1978
• Insurance (Prudential Standards) (Recovery Plan) Amendment Rules 2024 amends this document