Bermuda Insurance Regulations - eHow How to - Discover

By Peter Lancett, eHow Contributor

On the island of Bermuda, insurance businesses are regulated by laws contained in the various insurance-related Acts of Parliament, including the Insurance Act of 1978, which was consolidated in 2007. The Bermuda Monetary Authority is responsible for regulating the insurance industry on Bermuda, and regulations cover such areas as the registration of insurance businesses and the need for insurance businesses to maintain offices and representatives on Bermuda.

1. • Insurance businesses operating on the island of Bermuda must be registered as an insurer with the Bermuda Monetary Authority. It's an offense to operate an insurance business if you're not registered. An insurance business, described in the regulations as a body corporate, may register as one or more of a number of insurance business classes and may only offer insurance consistent with the class or classes that it registers with the Bermuda Monetary Authority. A Class 1 insurer is a body corporate owned by one person, where insurance cover is only provided for that person, or an affiliate of a body corporate that will only insure itself and other affiliates and shareholders. If a business is owned by two or more unrelated persons, where 80 percent of its insurance business is written to cover its own risks, it must register as a Class 2 insurer. Class 3 insurers must have a capital and monetary surplus of no less than $100,000,000.

   • An insurance company that's not based in Bermuda is classed as a nonresident insurance business. Section 21 of the Bermuda insurance regulations states that nonresident insurance businesses must maintain assets on Bermuda to a value not less than the amount of its risks on Bermuda. This means that a nonresident insurance company, writing insurance business on Bermuda must have assets on the island that can cover the full potential claims of all insurance policies covering risks on Bermuda. The nonresident company doesn't have to maintain assets on Bermuda to cover risks that it has underwritten anywhere else. The assets maintained on Bermuda must be held by a person approved by the Bermuda Monetary Authority as a trustee of the insurance company.

   • All registered insurers must maintain a principal office on Bermuda and must appoint a principal representative, who must be a Bermuda resident. The principal representative is responsible for filing the statutory financial statements and the statutory financial returns to the Bermuda Monetary Authority. An insurance company can appoint a Bermuda-based insurance management company to act as its principal representative. When an insurance company designates a principal representative or appoints an insurance management company to act as its principal representative, it must obtain the approval of the Bermuda Monetary Authority. The principal office can also be the office of the insurance management company, acting as the company's principal representative.

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• Photo Creditbermudas from above image by John R. Amelia from Fotolia.com

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