Carey Olsen Bermuda partner Gavin Woods takes a closer look at recent legislative changes affecting Bermuda's insurance brokers and agents.
Bermuda law prohibits any person, in or from within Bermuda, from carrying on business as an insurance broker or agent unless he is registered for the purpose by the Bermuda Monetary Authority (Authority). Insurance brokers and agents play a vital role in the insurance market. A broker is a person who arranges or places insurance business with insurers on behalf of prospective or existing policy-holders, whereas an agent is a person who, with the authority of an insurer, acts on such insurer’s behalf in relation to the initiation and receipt of proposals, the issue of policies and/or the collection of premiums. Currently, there are 95 brokers and 59 agents registered in Bermuda.
In February 2019, the Authority published the Insurance Brokers and Insurance Agents Code of Conduct. The Code was developed in consideration of the international standards set by the International Association of Insurance Supervisors and is intended to assist the Authority in providing appropriate, effective and efficient supervision and regulation of Bermuda-registered brokers and agents.
The Code establishes duties, requirements and standards to be complied with by registered brokers and agents. For example, the Code contains the following requirements:
- controllers and officers must be a ‘fit and proper’ person;
- implementation of a corporate governance framework;
- business must be conducted in a sound and prudent manner (including an appropriate physical presence in Bermuda);
- adequate accounting, record keeping systems and reporting requirements;
- high standards with respect to client relationships;
- appropriate disclosure requirements;
- policies and procedures with respect to conflicts of interest, complaint handling, business continuity and disaster recovery, applicable anti-corruption and anti-money laundering/anti-terrorist financing laws, and reputational risk;
- ensure outsourced operations are performed at the same level as if the work had been performed in-house and comply with Bermuda’s legal and regulatory requirements; and
- cooperation with regulatory authorities.
In assessing whether a broker or agent is conducting its business in a sound and prudent manner, the Authority will take a proportionate approach relative to the collective nature, scale and complexity of the business.
The Code came into effect upon publication, with all current brokers and agents having until 1 January 2020 to ensure compliance.
An original version of this article was published by The European, July 2019.