BMA to extend insurance code of conduct in 2024
The Bermuda Monetary Authority will continue to extend the Insurance Code of Conduct to retail insurers this year while reviewing and amending the insurance group supervision regime to incorporate holding company oversight for insurance groups.
These are just two of the goals of the BMA described in its 2024 business plan.
Other initiatives for the re/insurance sector in the plan include Further integrating ESG strategy into the regulatory framework, particularly in relation to climate change and focusing on cyber risk supervision.
BMA chief executive officer Craig Swan (pictured) said in the report that the Bermuda (re)insurance market remains well capitalised.
He added: "In response to the evolving nature and the scale of the business (including material growth), significant enhancements were made to the insurance regulatory and supervisory framework, particularly the parts of it that pertain to the long-term (life) sector, where a healthy share of the growth has occurred.
"These enhancements covered important areas such as reserving, capital requirements, governance and risk management standards and regulatory reporting to ensure the regulatory framework remains fit for purpose given the risk characteristics of the (re)insurance market.
"Accompanying the regulatory developments were enrichments to the BMA’s supervisory approach including prior approval of all life reinsurance block transactions, with the aim of ensuring appropriate transparency and cross-border cooperation."
He said: "In parallel with the implementation of these advancements and an evaluation of whether further enhancements are necessary, we will continue to build out the Insurance Code of Conduct, a phased initiative aimed at extending the conduct of business requirements to retail insurers. While not a new arena, the conduct regime upholds the importance of transparent procedures within financial services and widens the scope of our consumer education initiatives."
He said in more traditional sectors such as banking and (re) insurance, the BMA will amend and carry on the development of Bermuda’s resolution framework.
"We will also address operational resilience requirements in a holistic manner across the financial services sector. Additionally, we will continue participating in regulatory and other thought leadership forums."
On cybersecurity, Swan said the BMA was focused on cyber risk supervision.
"Sweeping technological innovation has emerged as a principal force for change and transformation across the financial services industry," he said. "At the same time, companies are aware of the risks involved and are adopting cybersecurity best practices to protect their operations.
"The BMA’s 2022 Cyber Underwriting Report highlights an uptick in demand for coverage in response to improved regulations regarding data privacy and consumer protection.
"In a world where digitisation is the norm, strong cybersecurity and governance standards provide firms with a safety net against cyber threats. The latest market research, featured in the report shows the industry’s risk posture and response is improving year-over-year."
He added: "Another BMA industry-focused publication, the 2022 Bermuda Insurance Sector Operational Cyber Risk Management report, encourages companies to bolster their safety protocols in response to ongoing cybersecurity risks and events. Cyber risk supervision will continue to be a focus in 2024."
The goals for the BMA on re/insurance this year include:
• Transposing and embedding the Common Framework for Internationally Active Insurance Groups and Holistic Framework for Systemic Risk into the Bermuda commercial regulatory regime, including but not limited to the resolution regime and the implementation of the Insurance Capital Standard
• Further integrating ESG strategy into the regulatory framework, particularly in relation to climate change. To assist in leveraging ESG opportunities, we will provide guidance on climate risk financial disclosures and publish a report with results from an insurance industry survey on climate risk, protection gaps and DEI initiatives
• Presenting related guidance on the integration of significant insurance accounting developments in the regulatory reporting environment, including International Financial Reporting Standard 17 (IFRS17) Insurance Contracts and the long-duration targeted improvements with the United States Generally Accepted Accounting Principles (GAAP)
• Reviewing and amending the insurance group supervision regime to incorporate holding company oversight for insurance groups.
The business plan can be found here: https://www.bma.bm/pdfview/8779.
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