Practice Direction Number 3 of 2006

Summary

This Practice Direction sets out the minimum books and records that Captive Insurance Companies and their Insurance Managers must maintain at the insurer's principal office in the Territory, elaborating on requirements already found in the Insurance Act 1994, the Insurance Regulations 1995 and the Anti-Money Laundering Code of Practice 1999. It is used by the Commission as a benchmark during on-site inspections of insurance managers.

• Policy records: Copies of all policies, endorsements/riders, renewal notices, or standard wording plus a listing of policies issued with key details.
• Claims: Records of claim payments and outstanding claim reserves, including actuarial reports or a report setting out reserve assumptions.
• Reinsurance: Copies of all inward and outward reinsurance agreements and related accounts.
• Bank accounts and investments: Bank statements and asset manager statements produced at least quarterly, plus an investment register updated at least quarterly for other investments.
• Loans and letters of credit: Copies of all loan agreements and letters of credit issued.
• General ledger: Ledger to be updated at least quarterly depending on transaction volume.
• Governance records: Minutes of board and shareholder meetings and written resolutions; up-to-date registers of shareholders and directors/officers.
• Identity verification: Evidence of identity of all shareholders and directors, such as passports, driving licences, social security numbers or utility bills.
• Service providers and management agreement: Details and agreements with underwriting, pricing, claims, investment, banking, accounting, auditing, actuarial and legal service providers, and a signed management agreement with the insurance manager.
• Other material facts: Details of material contractual commitments or contingent liabilities not shown on the balance sheet.

The document also reproduces the underlying statutory and regulatory provisions (Appendix A) requiring insurers to maintain a principal office and full books and records in the Territory, and the AML Code of Practice provisions on identity verification and transaction records.

Key obligations

• Captive Insurers and their Insurance Managers must maintain at the insurer's principal office in the Territory the books and records listed in the Practice Direction, in paper or electronic format.
• Bank account statements and asset manager investment statements must be produced at a minimum of once a quarter.
• Investment registers for assets not managed by an outside asset manager must be updated at a minimum of once a quarter.
• General ledgers must be updated at a minimum of once a quarter depending on transaction volume.
• Insurers must maintain up-to-date registers of shareholders and directors/officers and copies of minutes of board and shareholder meetings and written resolutions.
• Insurers must maintain evidence of identity of all shareholders and directors, including documents such as passports, driving licences, social security numbers or utility bills.
• Insurers must maintain a signed copy of the management agreement with the insurance manager setting out compliance requirements.
• Insurers must maintain a principal office in the Territory with full and proper books and records as required under section 21(1)(a) of the Insurance Act, 1994 and Regulation 11 of the Insurance Regulations, 1995.
• Relevant persons must establish and maintain in the Territory a record of identity verification evidence and a record of all transactions sufficient to identify source and recipient of payments, per the AML Code of Practice.

Applies to

Captive Insurance Companies, Insurance Managers, insurers licensed under the Insurance Act 1994

Deadlines

• minimum of once a quarter: Bank account statements and asset manager statements should be produced at least quarterly.
• minimum of once a quarter: Investment registers (for investments other than those managed by an outside asset manager) should be updated at least quarterly.
• minimum of once a quarter: General ledger should be updated at least quarterly, depending on transaction volume.