Bermuda: The vital role of the principal representative
Bermuda’s regulatory framework requires every insurance company registered under the Insurance Act 1978, including those without a physical presence on the island, to appoint a principal representative approved by the Bermuda Monetary Authority.
This principal representative, who can be a natural person or a body corporate, serves as a crucial link between the insurer and the BMA.
The role of the principal representative is primarily detailed in the Insurance Act, The Insurance Code of Conduct, and guidance notes published by the BMA.
They act as a key point of contact, ensuring that the Government and the BMA’s insurance division have a designated individual or company in Bermuda to oversee the insurer’s affairs.
One of the principal representative’s core functions is to serve as an “early warning” system, continuously monitoring the insurer’s compliance with Section 8A of the Insurance Act.
This includes a statutory obligation to report specific “reportable events” to the BMA, such as the insurer’s insolvency or likely insolvency, breaches of law or licence conditions, or failure to adhere to BMA directives.
The appointment of a principal representative requires BMA approval, and the representative cannot resign without providing proper notice to the BMA and ensuring that a BMA-approved replacement is in place. Both the insurer and the principal representative must provide at least 30 days’ written notice for termination of the appointment, unless the BMA agrees to a shorter notice period.
While the insurance manager of an insurer often assumes the role of principal representative, these roles can be held by separate entities. In cases where the roles are distinct, close collaboration and open communication between the principal representative and the insurer’s insurance managers are essential.
To uphold regulatory integrity, principal representatives must avoid conflicts of interest, disclosing any potential or actual conflicts to the BMA, which carefully assesses these disclosures to ensure impartiality.
While a body corporate can serve as a principal representative, the BMA scrutinises situations involving individuals with multiple roles — known as “dual hatting” — within the insurer or related entities.
The BMA may require demonstration that such dual roles do not create conflicts of interest or impede the principal representative’s ability to independently fulfil their responsibilities. The BMA’s priority is to ensure that the principal representative can objectively assess and report on the insurer’s affairs.
Principal representatives must be Bermuda residents and meet the BMA’s “fit and proper” criteria, emphasising competence, capability, honesty, integrity and reputation. They are also obligated to promptly inform the BMA of any changes to the information previously provided.
A critical aspect of the principal representative’s role involves diligent reporting. To fulfil this duty effectively, they must actively seek information from the insurer rather than passively waiting for issues to surface. This proactive approach enables them to identify and address potential problems, ensuring timely communication with the BMA.
The principal representative must notify the BMA forthwith regarding certain reportable events followed up within 14 days by a report in writing setting out all the particulars of the case.
Reportable events under the Insurance Act include:
- failure to comply with BMA conditions regarding solvency or liquidity
- any noncompliance with other BMA conditions, such as licence restrictions
- offences under specified sections of the Insurance Act relating to asset compliance and maintenance
- noncompliance with modified provisions or conditions imposed by the BMA
- involvement in any criminal proceedings
- cessation of insurance business in Bermuda
- significant losses affecting the enhanced capital requirement
- material changes within the insurer
- breach of regulatory undertakings given to the BMA
The Insurance Code of Conduct underscores the importance of the principal representative within the supervisory framework, highlighting their role in facilitating communication between the insurer and the BMA.
The BMA relies on the principal representative to provide information for various applications and to assist in resolving issues related to statutory financial statements and other matters.
The principal representative plays a vital role in Bermuda’s insurance sector, serving as a crucial conduit for information and ensuring compliance with regulatory requirements.
The BMA’s powers, combined with the duties of the principal representative, contribute to the robust supervision of Bermuda’s insurance sector.
First Published in The Royal Gazette, Legally Speaking column, May 2025
