Legislation governing the island’s insurance sector is to be amended to empower the Bermuda Monetary Authority to require commercial insurers to develop a recovery plan.

The Insurance Amendment Act 2023 has had a first reading in the House of Assembly.

The amending legislation defines a recovery plan as “a plan developed by an insurer or insurance group and maintained by the insurer or designated insurer, that identifies, in advance, options to restore the financial position and viability of an insurer or insurance group should that insurer or insurance group come under severe stress”.

Under the proposed amendments, the BMA may require a Class 3A, Class 3B, Class 4, Class C, Class D, Class E insurer or an insurance group to prepare a recovery plan.

Any such requirement must take into account the nature, scale, complexity and risk profile of the insurance business conducted by the insurer or insurance group, the amending legislation says.

An insurer or insurance group required to prepare a recovery plan must provide to the BMA such information and documentation for that plan or the preparation thereof as the BMA deems appropriate — and must maintain, at its head office in Bermuda, copies of the most recent recovery plan in both electronic and printed format.

The amending legislation also empowers the BMA to designate, for the purposes of supervision, a member of an internationally active insurance group as its “head of the IAIG”.

In determining the member to be designated as the head of the IAIG, the BMA must have regard to the member that exercises control over all insurers in the group, and other members of the group which may pose a risk to the insurance business of the group.

The BMA must notify the relevant member of the IAIG in writing of its intention to designate such member and take into account any written representations made by the member prior to the BMA issuing to that member its designation in writing.