The Bermuda Monetary Authority (BMA) has unveiled plans to amend the Insurance Code of Conduct and will be approaching the market for feedback on new proposals within the next few months.
This was revealed by Shauna MacKenzie, director, legal policy and enforcement at the BMA, at the Bermuda Captive Conference held this week (Monday June 8 to Wednesday June 10).
The code, first developed in 2010 and revised in 2014, contains the duties, requirements and compliance standards to be adhered to by all insurers. It stipulates that in order to achieve compliance, insurers are to develop and apply policies and procedures capable of assessment by the BMA.
One of the additions to the code being considered is a stipulation that a board must have sufficient oversight. It will require boards to understand any risks that could obstruct them fulfilling their duties in a correct and compliant manner.
“This has been used as a guideline but we are now taking the next step to make it a regulatory tool,” MacKenzie said. “We use it as a measure to judge how an entity is complying with corporate governance standards and if we see problems we can use the code as measure of what actions to take.
“It has been used as an instrument for five years now but we are very clear that the responsibility for corporate governance is on the board. That concept is embedded as part of our licensing criteria. We are looking to potentially amend the code and we will be putting a proposal out for the industry to discuss.”
She also stressed the importance of the concept of proportionality to the way in which the BMA regulates. This has always been central to the way Bermuda has done things and it will remain that way, she said.
“The authority will not prescribe how an insurer complies, the onus is on the insurer to demonstrate compliance based on its nature, scale and complexity. We take a proportional approach,” she said. “We do not have or want a one size fits all approach. Flexibility is very important and the approach is appropriate to the nature of their business.”
MacKenzie admitted that Bermuda has sometimes experienced push back on this principle from international regulators but it is becoming increasingly widely accepted.
David Doyle, director of Conyers Dill & Pearman, agreed that the concept of proportionality is very important to the way Bermuda regulates.
“There is a huge difference between a Class 1 insurer dealing only with the risk of its parent and a Class 3 insurer which might be huge in terms of GWP and may be dealing with multiple risks and stakeholders,” he said.
BMA, Insurance Code of Conduct, Bermuda, Regulation, Bermuda Captive Conference, Shauna MacKenzie