Insurance Act 1978 - Bermuda Laws

1 FAERNATFTQUOUBERMUDAINSURANCE ACT 19781978 : 39 TABLE OF CONTENTSPART IInterpretationMeaning of director , controller , chief executive , officer , senior executive , associate Meaning of parent and subsidiary companyPART IATHE AUTHORITYF unctions and duties of the AuthorityFunctions of the AuthorityAuthority s statement of principlesGuidanceCodes of ConductInsurance Advisory CommitteePART IIREGISTRATIONI nsurers to be registeredRegistration as insurerDetermination of class of registration for general businessClass 1 insurerClass 2 insurerClass 3 insurerClass 3A insurerClass 3B insurerClass 4 insurerDetermination of class of registration for long-term business11A1B22A2B2BA2C344A4B4C4D4DA4DB4 E4EA1 Insurance ACT 1978 Class A insurerClass B insurerClass C insurerClass D insurerClass E insurerClass IGBC lass ILTC lasses of insurer.

2 InterpretationFactors to be considered by Authority under section 4 Further registration requirementsPrudential standardsConsultationAuthority may exempt insurers from or modify prudential standardsAuthority may make adjustment to enhanced capital requirement, availablestatutory capital and surplus, and available statutory economic capital andsurplusAuthority may adjust registration requirements of innovative insurersProtection of public interest, policyholders of innovative insurers and clients ofinnovative intermediariesPaid up share capitalPrincipal office and principal representativePrincipal representative to report certain eventsAppointment of approved loss reserve specialistClass 3A, Class 3B, Class 4, Class C.

3 Class D and Class E insurer to maintainhead office in BermudaInsurance managers and intermediaries to be registeredThe Authority may register Insurance managers and intermediariesFactors to be considered by Authority under section 10 Power of Authority in relation to registrationRegistrationFeesPART IIIREGULATION OF INSURERS GENERALLYS tatutory financial statementsDeclaration of complianceAppointment and approval of auditorsAuditor to communicate certain matters to AuthorityKeeping and filing of statutory financial statementsAdditional financial statements prepared in accordance with GAAP anddeclaration of complianceInsurer to make financial returnsFailure to file statutory statements or returnsOpinion of loss reserve specialistRequirement to keep records in BermudaProhibition of non- Insurance business to be carried on by insurersMinister may require Bermuda investment4EB4EC4ED4EE4EF4EG4EH4F566A6B6 C6D6E6F788A8B8C910111213141515A1616A1717 A1818A18B18C19202 Insurance ACT 1978 Maintenance of assets in BermudaCustody of assetsPART IVINSURERS CARRYING ON LONG-TERM AND GENERAL BUSINESSI nsurers to which this Part appliesInsurer carrying on long-term and general business to maintain separate accountsCertification of dividendsTransfer of long-term businessAppointment of approved actuaryActuarial certificates of long-term business liabilitiesPART IVAGROUP SUPERVISIONI

4 NterpretationGroup SupervisorAuthority may exclude specified entities from group supervisionAuthority may include specified entities within group supervisionAuthority may withdraw as group supervisorFunctions of Authority as group supervisorAuthority to make RulesAppointment of an approved group actuaryPART VINSURANCE MANAGERS, BROKERS, AGENTS AND SALESMENI nsurance managers to maintain lists of insurers for which they actInsurance broker, agent or salesman deemed agent of insurer in certain casesPART VIPower to obtain information and reportsPower to require production of documentsCommunication with AuthorityMeaning of related company [repealed]POWERSI nvestigations on behalf of the AuthorityInvestigations of suspected contraventionsPower to require production of documentsPowers of entryObstruction of investigationsNotification of change of shareholder controller or officer of Insurance managerNotification by shareholder controllers of new or increased control privatecompaniesNotification by shareholder controllers of new or increased control - publiccompaniesNotification by shareholder controllers of disposal of shares in public and privatecompaniesObjection to new or increased control2122232424A25262727A27B27C27CA27D 27E27F27G282929A29B29C29D3030A30AA30B30C 30CA30D30E30EA30F3 Insurance ACT 1978 Contraventions by

5 ControllerObjection to existing controllerRestriction on and sale of sharesNotification by registered persons and designated insurers of change of controllerand officerMaterial changeNotification of material changeObjection to material changeContraventions by insurer[repealed]Failure to meet solvency requirementsFailure to comply with enhanced capital requirementClass 3A: exceeding net premiums written limitationClass C: exceeding total assets limitationClass D: exceeding total assets limitationRestrictions as to payment of dividendsRestrictions as to reduction of capitalPowers of interventionContraventions by designated insurerProcedure for giving directionsDirections in cases of urgencyPART VIADISCIPLINARY MEASURESP ower to impose civil penalties for breach of requirementsCivil penalties procedurePublic censurePublic censure procedureProhibition OrdersProhibition ordersProhibition orders: proceduresApplications relating to prohibition orders.

6 ProceduresDetermination of applications for variation VIIINSOLVENCY AND WINDING UPMargin of solvency for general businessWinding up of insurers under Companies Act 1981 Winding up on petition of AuthorityInsurers carrying on long-term businessWinding up of insurers carrying on long-term and general businessWinding up of insurersContinuation of long-term business of insurer in liquidationSubsidiary insurers30G30H30I30J30JA30JB30JC30JD31A3 1AA31AB31AC31AD31B31C3232A32B32C32D32E32 F32G32H32I32J32K32L33343535A3636A37384 Insurance ACT 1978 Reduction of contracts as alternative to winding upWinding up rulesPART VIIICANCELLATION OF REGISTRATIONC ancellation of registration of insurersCancellation of registration of Insurance managers, etcCancellation of registration to be gazettedPART VIIIAAPPEAL TRIBUNALSR ights of appealConstitution of tribunalDetermination of appealsCosts, procedure and evidenceFurther appeals on a point of lawPART VIIIBNOTICESW arning noticesDecision noticesConclusion of actionsNotices of discontinuancePublicationPublicationPART IXSUPPLEMENTARYP rohibition of loans to directors.

7 EtcEffect on business transactions of infringement of ActActing on behalf of unregistered insurerPersonal liability of intermediaries in certain casesControl of advertisementsIssue of false documents etcPART XMISCELLANEOUSN oticesPowers exercisable to assist foreign regulatory authorities[repealed]Service of notice on Authority[repealed][repealed][repealed]3 94041424444A44B44C44D44E44F44G44H44I4546 474849505151A51AA51B51C51D5 Insurance ACT 1978 Restriction on disclosure of informationRestricted informationDisclosure for facilitating the discharge of functions of the AuthorityDisclosure for facilitating the discharge of functions by other authoritiesInformation supplied to the Authority by relevant overseas authorityRegulations by MinisterSpecific offencesGeneral provisions relating to offencesCivil debt and civil penaltiesThe Authority may modify certain provisionsApplicationDesignated investment contractsTransitional [omitted]Amendment of Act No.

8 43 of 1971 [omitted]Commencement [omitted]SCHEDULE[preamble and words of enactment omitted]PART IInterpretationIn this Act, unless the context otherwise requires actuary means a member in good standing of the Canadian institute of Actuaries,the Casualty Actuarial Society (in the ), the institute of Actuaries ofAustralia, the institute and Faculty of Actuaries (for the UK), the Society ofActuaries (in the ); the american Academy of Actuaries; or a member in goodstanding of an actuarial body recognized by the Authority; approved actuary means an individual approved by the Authority under section26(3); approved auditor means an auditor approved by the Authority under section16(3); association of underwriters means an association of individual underwriters,organized according to the system known as Lloyd s whereby each underwritingmember of the association becomes liable for a separate and proportionate partof the sum secured by each policy subscribed to by that association; and, inrelation to such an association as aforesaid, recognized means recognized bythe Authority; auditor means either a person entitled to practise as a public accountant in Bermuda .

9 Or5252A52B52C53545555A565757A5859601(1)( a)6 Insurance ACT 1978a person who has qualified as an accountant by examination of one of theInstitutes of Chartered accountants of England and Wales, Ireland andScotland or the Canadian institute of Chartered accountants or theAmerican institute of certified public accountants ; ora person recognized by the Authority as an auditor; Authority means the Bermuda Monetary Authority established by the BermudaMonetary Authority Act 1969; available statutory capital and surplus means an amount equal to the totalstatutory capital and surplus including any adjustments thereto made undersection 6D or by or under Rules made under section 6A; available statutory economic capital and surplus means an amount equal to thetotal statutory economic capital and surplus including any adjustmentsthereto made under section 6D or by or under Rules made under section 6A ofthis Act; bank means an institution licensed as a bank under the Banks and DepositCompanies Act 1999.

10 Capital and solvency return means such return relating to the insurer s orinsurance group s risk management practices and to the information used bythe insurer or Insurance group to calculate its enhanced capital requirementas may be prescribed by or under Rules made under section 6A capital redemption contract means a contract (which by its terms is expressed tobe a capital redemption contract or a funding agreement) under which aninsurer may receive and accumulate sums of money; andpay a sum or sums of money or render money s worth,on dates and in amounts that are not based on life contingencies of any person; Class 1 , Class 2 , Class 3 , Class 3A , Class 3B , Class 4 and SpecialPurpose Insurer in relation to an insurer carrying on general business meanthe class of the insurer s registration under section 4; Class A , Class B , Class C , Class D and Class E in rel