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
of controllers, which is assessed by reference to the competence, capability, honesty, integrity and reputa- tion of the officer controllers. The Intermediary Code sets out the principles that must be adhered to by insurance intermediaries, including the need for business to be conducted in a prudent manner, client relationships, disclosure, complaint handling, business continuity and disaster recovery, conflicts of interest, fraud, client due dili- gence, outsourcing and co-operation with the BMA. Insurance intermediaries must maintain adequate pro- fessional indemnity insurance but are not otherwise subject to any prudential requirements. 2.2 Writing of Insurance and Reinsurance Concerning the writing of insurance and reinsurance, see 2.1 Insurance and Reinsurance Regulatory Bod- ies and Legislative Guidance . 2.3 Taxation of Premium There is no taxation on premiums in Bermuda at the present time. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers The Insurance Act prohibits the conduct of insurance business in or from within Bermuda unless the per- son carrying out such activities is registered under the Insurance Act. It may be possible for an overseas carrier to structure its activities in such a way that it is deemed not to be conducting insurance business in or from within Bermuda, in which case it would not need to be registered under the Insurance Act. Where insurance business is conducted in or from within Bermuda, then the carrier must be registered under the Insurance Act and must comply with the Bermuda insurance regulatory regime, including establishing and maintaining a head office and satisfy- ing the applicable economic substance requirements. Overseas carriers may apply for a permit to conduct business in Bermuda under the Companies Act. Such
carriers would also have to apply for registration under the Insurance Act in order to conduct insurance busi- ness in or from within Bermuda, and would be subject to the Bermuda regulatory regime. There are a few representatives of overseas carriers in Bermuda, commonly referred to as “non-resident insurance undertakings” (NRIUs). Most NRIUs engage agents in Bermuda who receive commissions on pre- miums written. Most of these premiums arise from the sale of life insurance policies. 3.2 Fronting Fronting is permitted in Bermuda. Where a Bermuda insurance company proposes to engage in fronting, it should consider whether its business plan needs to allow for it and whether the BMA should be engaged regarding the proposal. 4. Transaction Activity 4.1 M&A Activities Relating to Insurance Companies Where M&A transactions relating to insurance com- panies are undertaken, a BMA “no objection” or some form of notification to the BMA will be required. The BMA must be informed of all of the controllers of reg- istered insurers in Bermuda and any material changes to such controllers, and of material changes to the business and operations of the insurer. A “controller” for this purpose means: • the managing director of the registered insurer or its parent company; • the chief executive of the registered insurer or of its parent company; • a 10%, 20%, 33% or 50% “shareholder controller”; or • any person in accordance with whose directions or instructions the directors of the registered insurer or of its parent company are accustomed to act. The definition of shareholder controller is set out in the Insurance Act, but generally refers to:
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