Continuing its recast of the Bermuda regulatory regime applicable to the insurance industry, the Bermuda Monetary Authority (BMA), has instituted a number of changes to its statutory and prudential reporting requirements.
The changes apply to commercial insurers (i.e. Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurers) and insurance groups (Commercial Insurers) with the implementation of the Economic Balance Sheet (EBS) framework.
Effective 1 January 2016, EBS was embedded in the Bermuda legislative and regulatory regime through a variety of legislative amendments. It modified the reporting regime applicable to Commercial Insurers and, as a result, the procedure for Commercial Insurers seeking exemptions from accounting provisions or filing requirements that was previously granted by the BMA under sections 56 and 6C of the Insurance Act 1978, as amended (Act).
Previously, Commercial Insurers were required to prepare and file with the BMA statutory financial statements (SFS) under section 15 of the Act and as prescribed under the Insurance Accounts Regulations 1980 (Accounts Regulations), additional generally accepted accounting principles (GAAP) financial statements under section 17A of the Act — and a statutory financial return (SFR) under section 18 of the Act.
Commercial Insurers were able to obtain directions under section 56 of the Act, by which the BMA exempted such insurers from some or all of the requirements of sections 15 to 18 of the Act (Section 56 Direction).
Commercial Insurers were also able to be exempted from certain prudential standards in relation to their enhanced capital requirements, capital and solvency returns, insurance reserves and eligible capital imposed under rules made by the BMA under section 6A of the Act (Section 6A Rules). Exemptions to Section 6A Rules might be granted pursuant to section 6C of the Act, where the BMA concluded that an exemption did not prejudice the policyholders of that insurer and that insurer’s risk or insurance group profile deviated materially from the assumptions underlying the enhanced capital requirement (ECR) applicable to the insurer.
