Insurance Guidelines 2016

Summary

These Guidelines, issued by the BVI Financial Services Commission under the Insurance Act 2008 and Insurance Regulations 2009, explain how insurers, insurance managers, agents and brokers should apply for and maintain licences following 2015 amendments that created new captive insurance categories and changed reinsurance, segregated portfolio and asset maintenance rules. They took effect on 1 November 2016 and are aimed at licensees and prospective licensees preparing applications and ongoing filings with the Commission.

• New licence categories: Creates Category E (pure captive, related party business only) and Category F (captive underwriting some unrelated party business to qualify under a foreign jurisdiction's law) insurer licences, available only to BVI business companies.
• Combined life/health and property/casualty licensing: Allows applicants to apply for a single licence covering both life and health, and property and casualty insurance business.
• Segregated portfolio companies: BVI insurers may be licensed as segregated portfolio companies (as a Category C insurer) alongside SPC incorporation under the BVI Business Companies Act.
• Cut through endorsement clause: A BVI domestic insurer not rated A- or better by AM Best or a similar agency must include a cut through endorsement clause in its reinsurance contract(s).
• Regulatory deposit option: BVI insurers carrying on domestic business, or specified foreign insurer licensees, may opt to pay a regulatory deposit to the Commission instead of establishing a domestic business trust.
• Reclassification of existing licensees: Existing long-term and general insurance business licensees are automatically recognised as life and health, and property and casualty licensees respectively; those wanting both must apply afresh.

• Application requirements: Applicants for Category E, Category F, combined life/property licences, or SPC licensing must submit the prescribed Application Form (relevant parts), business plan and five year financial projections, GAPR Forms A and B-1 for directors, senior officers, auditor and insurance manager, and the requisite application and approval fees.
• Notification duties: Category E licensees must notify the Commission of changes in directors, senior officers and certain shareholder changes as soon as practicable and in any case not more than 14 days after the change occurs.
• Regulatory deposit maintenance: A BVI or foreign insurer must notify the Commission immediately in writing if its liabilities exceed the regulatory deposit held, and pay the shortfall to bring the deposit up to the level of its liabilities.
• Additional information requests: Applicants must provide any additional information or clarification requested by the Commission within the timeframe the Commission specifies, or notify the Commission promptly if it cannot be provided.

The Guidelines also cover appointment of actuaries and auditors, designated representatives, record keeping and financial statement submission, and the use, variation and termination of regulatory deposits, all of which licensees should consult directly for detailed procedural requirements.

Key obligations

• Applicants for Category E, F, combined life and property/casualty, or SPC insurer licences must submit the prescribed Application Form together with a business plan, five year financial projections, GAPR Forms A and B-1, and the required application fee
• Every application must be accompanied by the requisite application fee, and the licence approval fee must be paid separately before approval is considered final
• Category E insurer applicants must provide notarised or certified written confirmation that they will underwrite related party business only and will notify the Commission of changes in directors, senior officers and relevant shareholders not more than 14 days after the change occurs
• Applicants must provide any additional information or clarification requested by the Commission within the timeframe specified in the request
• Existing licensees applying to be reclassified into Category E or F must submit a new application under paragraph 3.7.2 or 3.7.3 as applicable
• Insurance agents and brokers must be licensed BVI business companies and submit the requisite Application Form parts and fee to conduct business
• A BVI domestic insurer not rated A- or better must include a cut through endorsement clause in its reinsurance contracts
• A BVI or foreign insurer must notify the Commission immediately in writing if its liabilities exceed its regulatory deposit and pay the difference to the Commission
• Insurers wishing to terminate a domestic business trust in favour of a regulatory deposit, or to reduce a regulatory deposit, must apply to the Commission in writing with supporting rationale and liability information

Applies to

BVI insurers (domestic), foreign insurer licensees, Category E pure captive insurers, Category F captive insurers, insurers carrying on both life and health, and property and casualty insurance business, segregated portfolio company insurers (Category C), insurance agents, insurance brokers, insurance managers

Deadlines

• 1 November 2016: Commencement date on which the Insurance Guidelines 2016 come into force
• not more than 14 days after the occurrence of any change: Category E insurer licensees must notify the Commission of changes in directors, senior officers and relevant shareholders within this period
• immediately: A BVI or foreign insurer must notify the Commission in writing immediately if its liabilities exceed the regulatory deposit held