Kinika Armstrong, of Appleby, outlined the critical elements needed for Bermuda’s insurance and reinsurance market to continue thriving, emphasizing the importance of effective regulatory oversight in a recent Royal Gazette article.
Armstrong highlighted that regulatory oversight is essential to fostering a transparent and accountable insurance environment on the island. According to her, the Bermuda Insurance Act 1978 provides the necessary framework, with the Bermuda Monetary Authority (BMA) serving as the primary regulator.
Section eight of the Act mandates close oversight of insurance entities, requiring them to operate transparently and accountably. The section specifies that insurers, insurance managers, and intermediaries must maintain a physical presence on the island.
“This designation of key individuals enables the BMA to closely monitor the activities of insurance entities, ensure compliance with regulations, and protect the interests of policyholders and other stakeholders… It demonstrates a commitment to operating within the regulatory framework and being accessible to the BMA,” Armstrong said.
A principal representative (PR), a statutory function-holder as prescribed by the Act, is also crucial for ensuring an insurer’s compliance, Armstrong explained. The PR must reside in Bermuda, possess integrity, and have a strong understanding of insurance laws and regulations, she said. The BMA must approve the PR, ensuring they meet specific qualifications and experience criteria.
According to Armstrong, insurers must promptly notify the BMA of any changes to their principal office or PR, followed by formal written confirmation within 14 days. Upon registration, insurers are required to inform the BMA of their principal office’s location and provide details about their PR, including name, qualifications, and contact information.
Such changes, such as a new address for the principal office or the appointment of a new PR, must be reported to the BMA. Armstrong also said that section eight prohibits the termination or resignation of a PR without justifiable reasons, such as retirement or serious illness. Both parties must give the BMA 30 days’ written notice of their intention to terminate the appointment or cease acting as a PR, ensuring the BMA stays informed of leadership changes and can ensure a smooth transition.
PRs must report certain events to the BMA in writing within 14 days, such as potential insolvency, failure to comply with BMA conditions, involvement in criminal proceedings, or cessation of insurance business in Bermuda. Failure to provide these notifications can result in offences punishable by fines or imprisonment.
Armstrong concluded that as Bermuda’s insurance landscape evolves, the effective regulation provided by section eight will remain crucial for maintaining a robust and well-functioning industry.
