BERMUDA Law and Practice Contributed by: Brad Adderley, Matthew Carr, Max Tetlow, Cathryn Minors, Josephine Noddings, Aleisha Hollis, Melinda Mayne, Milaun Perott and Mya Gibbons, Appleby
long-term liquidity requirements and policyholder obligations. Furthermore, the insurer must ensure that investment decisions have been executed in the best interest of its policyholders. Insurers must comply with the Insurance Sector Oper- ational Cyber-Risk Management Code of Conduct (the “Cyber Code”). The Cyber Code applies to all insur- ers, insurance managers and insurance intermediaries (agents, brokers and insurance marketplace providers – “Registrants”). The Cyber Code establishes duties, requirements, standards, procedures and principles to be complied with in relation to operational cyber- risk management. The BMA expects that cyber-risk controls will be proportional to the nature, scale and complexity of the organisation. The BMA also requires that insurers appoint a chief information security officer (CISO). The role of the CISO must be allocated appropriately to a qualified member of staff or to an outsourced resource. The role of the CISO is to implement and monitor the opera- tional cyber-risk management programme. The CISO role is expected to be of sufficient seniority to facili- tate the effective delivery of the operational cyber-risk Every insurance company registered in Bermuda, even those with no physical presence on the island, must appoint a principal representative. A principal representative can take the form of a natural person or body corporate, but is more often a body corporate. Except in the case of commercial reinsurers, the insur- ance manager of an insurer commonly also acts as the insurer’s principal representative, but it is possible for both roles to be fulfilled by two separate entities. For commercial reinsurers, the principal representa- tive is typically an individual. The BMA must approve the appointment of a principal representative by an insurer. management programme. Principal Representative The principal representative exists so that the BMA can have some identified individual or company pre- sent in Bermuda to whom it can look in respect of an insurer’s affairs. The principal representative has specific statutory obligations, including the require- ment to report certain events to the BMA, breach of
which constitutes an offence under the Insurance Act. In particular, the principal representative must report the insolvency or likely insolvency of the insurer, the breach by the insurer of any law or the insurer’s licence, the breach of any condition or solvency mar- gin of the insurer, or the failure by the insurer to adhere to certain other directions of the BMA. Auditor Subject to any directions given by the BMA to the contrary, every insurer must appoint and maintain an auditor approved by the BMA. Insurers must have their statutory financial returns audited annually by an approved auditor. Under prevailing policy, the BMA will only appoint individuals or firms that are resident in Bermuda as approved auditors. Loss Reserve Specialist For general insurers, the Insurance Act stipulates that in certain instances a loss reserve specialist (LRS), approved by the BMA, must opine on their loss reserves. The LRS is usually an actuary but must be independent from the actuary who sets the reserve levels (see the following). This opinion gives the BMA additional assurance concerning the level of reserves carried by the insurer. Actuary Insurers registered as long-term insurers must appoint an actuary in accordance with the Act, and have this appointment approved by the BMA. The primary role of the approved actuary is to opine on the adequacy of the total long-term business insurance reserves, reflected in insurers’ statutory financial statements and statutory financial returns, and any other matters specified by the BMA. Insurance Intermediaries Insurance intermediaries, including insurance man- agers, brokers, agents or insurance marketplace providers, or their innovative counterparts – IM, IB, IA or IMPs (collectively, “insurance intermediaries”) – must comply with the BMA Insurance Brokers and Insurance Agents Code of Conduct (the “Intermedi- ary Code”). Insurance intermediaries can be either a natural person or a body corporate. The insurance intermediary must also meet the minimum criteria for registration. These include the fitness and propriety
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