The Insurance Department (comprising of the Insurance Supervision department and License and Authorisations department) is responsible for the supervision,
regulation and inspection of Bermuda’s insurance companies and for the
licensing of all insurance companies, brokers, agents and managers. The Insurance
Act 1978 (the “Act”) provides the Authority with substantive licensing,
supervision and intervention powers.
The Authority always seeks to act in
the best interests of both current and prospective policyholders while
facilitating the continued development of a viable, healthy, competitive and
innovative insurance industry. The Authority has a risk-based supervisory
process, which categorises regulated entities according to a number of
parameters within each class of insurance.
Key elements of the Authority’s
supervisory regime include (i) scrutinizing statutory financial returns
quarterly and annually; (ii) meetings with senior management as needed; (iii) performing
on-site visits and inspections; and (iv)
hosting or participating in supervisory colleges periodically.
Additionally, the Insurance Department works
in collaboration with other departments within the Authority to provide
supervision that reflects the nature, scale and complexity of registrants in
accordance with the proportionality principle. As an example, actuarial
certification of insurance liabilities is required annually for Class 3, 3A,
3B, Class 4 insurers and all Long-Term business, and tri-annually for Class 2
insurers. The Authority is able to concentrate its resources in those
areas that need most attention, placing particular weight on the early
identification of areas of non-compliance and possible emerging problems.
The Authority is a charter member of
the International Association of Insurance Supervisors (“IAIS”) and continues
to be closely involved with that body in the development of guidelines for
global insurance regulation.
The Authority’s risk based supervisory approach
involves the application of appropriate supervisory intensity to key areas of risk, including where material
amounts of business are transacted with unrelated parties. Reliance is placed on
transparency and ongoing disclosures where counterparties are deemed to be sophisticated
and capable of understanding the risks underlying their business and determining
their degree of tolerance for them.
In developing its regime, the Authority
seeks foremost to act in the best interests of existing and prospective
policyholders while facilitating the continued development of a viable,
healthy, competitive and innovative insurance industry. This approach has been
applied to (re)insurance and captive insurance businesses in Bermuda for over
20 years. During that period, the Authority has also been assisted in
implementing supervision that is both appropriate and effective by the
existence of a mature financial market infrastructure, and it has been able to
tailor its supervisory approach accordingly.
A key component of the Authority’s
supervisory regime is the requirement for companies to provide to the Authority
annual statements audited by an approved auditor. The auditor is required to
express an opinion on the reasonableness of the statements and on whether the
statutory ratios comply with the requirements of the Act and Regulations.
In addition to the extensive on-site
work conducted by approved auditors and actuaries, the Authority’s staff carry
out detailed on-site reviews, coupled with comprehensive off-site analysis.
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