A number of Bermuda registered (re)insurers operate within a group structure. This means that an insurer’s financial position and risk profile, and its overall prudential position, may be impacted by being part of a group, both positively and negatively. Therefore, the Bermuda Monetary Authority has established a group supervision framework for insurance groups. Currently there are approximately 20 insurance groups for which the Authority is the Group Supervisor, since their primary operations are controlled and managed from Bermuda.
Further information about Bermuda's group supervision regime is available here and here. Below is a brief overview of key components of the regime.
The Authority derives its powers from, and conducts its responsibilities as Group Supervisor under, the Insurance Act 1978 (the Act), as amended; amendments to establish the group supervision framework became effective in March 2010.
Other legislations governing group supervision are the Insurance (Group Supervision) Rules 2011 and the Insurance (Prudential Standards) (Insurance Groups Solvency Requirement) Rules 2011.
All of Bermuda’s insurance groups that are subject to supervision are internationally active. Therefore, Bermuda’s group supervision framework reflects international developments in this area and principles for insurance group supervision adopted by the International Association of Insurance Supervisors (IAIS).
The main objectives of group supervision include:
- Policyholder protection
- Promoting financial stability
- Ensuring at least one competent authority has a complete view of the group and its associated risks; and
- Addressing any supervisory gaps, the risk of contagion and the impact of any unregulated entities within a group
Therefore, key areas of focus within the group supervision framework are:
- Ensuring solvency at group level;
- Monitoring intra-group transactions; and
- Assessing corporate governance, risk management and internal control processes of insurance groups.
The Authority’s Insurance Supervision department conducts its functions as Group Supervisor under the Act, which include:
- Assessing insurance groups’ compliance with the Authority’s rules;
- Ongoing supervisory review and assessment of a group’s financial position and governance systems;
- Coordinating the gathering and dissemination of relevant or essential information from groups for going concern or emergency situations;
- Convening and conducting supervisory colleges with other supervisory authorities that have regulatory oversight of entities within a group; and
- Coordinating any enforcement action that may be taken against insurance groups or their members.
The Authority has issued information and guidance that provides details of how it:
- Applies Bermuda’s group supervision regime;
- Performs its role as Group Supervisor; and
- Conducts supervisory colleges for Bermuda insurance groups.
The guidance is summarised below and can assist companies identified as Bermuda groups as they transition to compliance with the group supervision framework.
These include how the Authority:
- Determines that it is appropriate for it to assume the role of Group wide Supervisor;
- Conducts supervisory reviews and assessment of a group’s governance systems and compliance with solvency rules; and
- Coordinates gathering and disseminating information from groups.
This Guidance Note specifies the duties and responsibilities of the DI. The DI is appointed by the Authority as the lead insurer and administrative point of contact within a group, through whom the group is required to fulfil its regulatory reporting and compliance obligations.
The Authority establishes a supervisory college for every group for which it is Group Supervisor. Supervisory colleges are designed to provide a platform for:
- Effective supervisory cooperation and coordination between the Authority and other regulators in relation to Bermuda groups
- Developing a shared understanding among relevant regulators of the risk profile of groups in order to minimise contagion risk; and
- Reducing any supervisory gaps and avoiding unnecessary supervisory duplication
The guidance provides details on the governance and operational processes of supervisory colleges, including the use of memoranda of understanding and confidentiality agreements, as well as rules of engagement for decision-making, dispute resolution and supervisory cooperation.
Pursuant to section 27H of the Insurance Act 1978, the Bermuda Monetary Authority is the Group Supervisor of the following IAIGs:
- Athora Holding Ltd.
