The BMA has a dedicated licensing and authorisations team that reviews all proposals to set up new businesses. In addition to internal staff review, applications are considered by an advisory expert panel drawn from qualified industry participants and are then subject to independent review and decision by a committee of senior Authority staff. Applications are closely vetted for the fitness, propriety and underwriting experience of the management, the plausibility of the proposed business plan and the level of capitalisation relative to the proposed risk profile, amongst other factors.
As required by the Act, the Authority maintains a register giving details of each licensed insurer. This is available for inspection by members of the public in the Public Files at the Registrar of Companies.
a) Timeliness of Reporting
An important element of companies’ statutory responsibility relates to their obligation to file an annual audited financial return with the Authority. Actuarial certification of loss reserves are required annually for Class 3 and Class 4 companies, and triennially for Class 2 companies.
b) Solvency Margin Maintenance
The Authority requires insurers to maintain strict minimum solvency margins, which vary according to the class of the insurers, (which is in turn determined by the nature and risk of the business to be conducted). For example, Class 4 companies, representing entities writing property/catastrophe or excess liability coverage, have a minimum solvency margin of the greater of $100 million, 15% of net loss reserves and a sliding scale of percentage of net premiums. The Authority is in the process of introducing a risk-capital measure for Class 4 companies, and establishing a regulatory review process which will enable companies to use in-house models to determine capital needs.
It is noteworthy that, in spite of the scale of Bermuda’s insurance sector, the incidence of insolvency remains very low. This reflects the conservative approach taken to new incorporations and the proactive nature of the Authority to intervene at the early stages when potential solvency problems appear.
c) Statement of Principles
The Authority has published a Statement of Principles (‘the Principles’), which has been made pursuant to section 2A of the Insurance Act 1978 (‘the Act’). The Principles relate to the Authority’s decisions on whether to register an entity, to cancel the registration of a registered entity, to impose conditions upon a registration, or to give certain directions to a registered entity. These Principles are of general application and seek to take account of the wide diversity of registered entities that may be licensed under the Act, as well as relevant institutional and market developments.
Insurance SOP
