The reinsurance industry in Bermuda is based on strong regulations – expert

Appleby’s Kinika Armstrong outlined the key elements needed to further develop Bermuda’s insurance and reinsurance market in a recent Royal Gazette article, highlighting the importance of effective regulatory oversight.

Armstrong stressed that regulatory oversight is essential to foster a transparent and accountable insurance environment on the island. It says the Bermuda Insurance Act 1978 provides the necessary framework, with the main regulator being the Bermuda Monetary Authority (BMA).

Article eight of the Act imposes an obligation to closely supervise insurance entities, requiring them to act transparently and responsibly. This section specifies that insurers, insurance managers and intermediaries must maintain a physical presence on the island.

“This appointment of key individuals enables the BMA to closely monitor the activities of insurance entities, ensure regulatory compliance 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.

Armstrong explained that the principal representative (PR), who is the statutory person performing a function under the Act, is also crucial to ensuring an insurer’s compliance with the regulations. She said PRs must be Bermuda-based, have integrity and have a thorough knowledge of insurance laws and regulations. The BMA must approve the PR, ensuring it meets certain qualification and experience criteria.

According to Armstrong, insurers must notify the BMA immediately of any changes to their head office or PR, after which they must provide formal written confirmation within 14 days. Once registered, insurers must inform the BMA of the location of their head office and provide details of their PR, including name, qualifications and contact details.

Changes such as a new headquarters address or the establishment of a new PR must be reported to the BMA. Armstrong also said Section Eight prohibits the termination or resignation of a PR without good cause, such as retirement or serious illness. Both parties must provide the BMA with 30 days’ written notice of their intention to terminate the appointment or cease the PR role, ensuring the BMA is kept informed of changes in leadership and can ensure a smooth transition.

PRs must report certain events in writing to the BMA within 14 days, such as potential insolvency, failure to comply with BMA terms, involvement in criminal proceedings or cessation of insurance activities in Bermuda. Failure to provide these notifications may result in an offense punishable by a fine or imprisonment.

Armstrong concluded that as Bermuda’s insurance landscape evolves, effective section eight regulation will be critical to maintaining a robust and well-functioning industry.