Insurance Amendment Act 2004
INSURANCE AMENDMENT ACT 2004

1

BERMUDA

2004 : 29

THE INSURANCE AMENDMENT ACT 2004

Date of Assent: 10 December 2004

Operative Date: 10 December 2004

WHEREAS it is expedient to make provision for the issue of
guidance to regulated persons and others on the application of the
Insurance Act 1978, to make provision for the approval of auditors and
loss reserve specialists, and for connected matters:

Be it enacted by the Queen's Most Excellent Majesty, by and with
the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:

Short title
1 This Act may be cited as the Insurance Amendment Act 2004.

Interpretation
2 In this Act, "principal Act" means the Insurance Act 1978.

Section 1 of principal Act amended
3 Section 1 of the principal Act is amended —

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(a) by inserting in the appropriate alphabetical order the
following definition

""approved auditor" means an auditor approved by the
Authority under section 16(3);";

(b) by deleting the definition of "loss reserve specialist" and
substituting the following 

"loss reserve specialist" means a person approved by the
Authority under section 8B(3) as an insurer's loss
reserve specialist;".

Sections 2A inserted in principal Act
4 The principal Act is amended by inserting the following section
after section 2

"Guidance
2A (1) The Authority may from time to time give guidance on
the application of this Act and regulations made under it,
including guidance as to the duties, requirements and standards
to be complied with by persons registered under this Act or
otherwise regulated under it, and the procedures and sound
principles to be observed by such persons and by auditors,
principal representatives and loss reserve specialists.

(2) The Authority may publish such guidance (which may
be in the form of information and advice) in such manner as it
thinks fit.".

Section 4 of principal Act amended
5 Section 4 of the principal Act is amended —

(a) in subsection (4), by deleting "a Class 1, Class 2 or Class
3 insurer, or a long term insurer" and substituting "an
insurer";

(b) by repealing subsection (5).

Section 8 of principal Act amended
6 Section 8(3) of the principal Act is amended by deleting "twenty-
one" and substituting "fourteen".

Section 8A of principal Act amended
7 (1) Section 8A of the principal Act is amended 

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(a) by repealing subsection (1) and substituting the
following

" (1) A principal representative shall forthwith notify
the Authority, in such manner as it may direct, 

(a) on his reaching a view that there is a likelihood
of the insurer for which he acts becoming
insolvent; or

(b) on its coming to his knowledge, or his having
reason to believe, that an event to which this
section applies has occurred.".

(b) by inserting the following subsection after subsection
(1)

" (1a) Within fourteen days of such notification, the
principal representative shall furnish the Authority with
a report in writing setting out all the particulars of the
case that are available to him.".

Section 8B inserted in principal Act
8 The principal Act is amended by inserting the following section
after section 8A

"Appointment of approved loss reserve specialist
8B (1) Each Class 2, Class 3, and Class 4 insurer, and when
directed by the Authority a Class 1 insurer, shall appoint an
individual approved by the Authority under subsection (3) as a
person qualified to assess the adequacy of insurance loss
reserves, as that insurer's loss reserve specialist.

(2) Before making any such appointment, an insurer shall
submit particulars of such person to the Authority for approval.

(3) The Authority, on being satisfied that a person is fit and
proper to hold such an appointment, shall approve his
appointment as that insurer's loss reserve specialist.

(4) Subject to subsection (5), the Authority may revoke an
approval of a loss reserve specialist in respect of any insurer, if it
is satisfied that he is no longer a fit and proper person to hold
the appointment.

(5) The Authority shall not revoke its approval unless it has
first notified the loss reserve specialist and the insurer of its
intention to do so.".

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Section 15 of the principal Act amended
9 Section 15 of the principal Act is amended by inserting the
following subsection after subsection (3)

"(4) The statutory financial statements of an insurer shall be
audited annually by the insurer's approved auditor.".

Section 16 of principal Act repealed and replaced
10 The principal Act is amended by repealing section 16 and
substituting the following 

"Appointment and approval of auditors
16 (1) Every insurer shall appoint an auditor approved by
the Authority under subsection (3), to audit its statutory
financial statements.

(2) Before making any such appointment, an insurer shall
submit particulars of such person to the Authority for approval.

(3) The Authority, on being satisfied that a person is fit and
proper to hold such an appointment, shall approve his
appointment as that insurer's auditor.

(4) Subject to subsection (5), the Authority may revoke an
approval of an auditor in respect of any insurer, if it is satisfied
that he is no longer a fit and proper person to hold the
appointment.

(5) The Authority shall not revoke its approval unless it has
first notified the auditor and the insurer of its intention to do so.

(6) No person having an interest in any insurer otherwise
than as an insured, and no officer, servant or agent of any
insurer, shall be eligible for appointment as an approved auditor
for that insurer; and any person appointed as an approved
auditor to any insurer who subsequently acquires such interest
or becomes an officer, servant or agent of that insurer shall
cease to be an approved auditor.

(7) If an insurer fails to appoint an approved auditor as
required by subsection (1), or at any time fails to fill a vacancy
for such auditor, the Authority may appoint an approved auditor
for the insurer and shall fix the remuneration to be paid by that
insurer, if not sooner agreed by the insurer and the auditor,
within fourteen days.

(8) An insurer shall forthwith give written notice to the
Authority if it 

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(a) proposes to remove an approved auditor before the
expiration of his term of office; or

(b) proposes to replace an approved auditor at the
expiration of the term of his office with a different
auditor.".

Section 16A inserted in principal Act
11 The principal Act is amended by inserting the following section
after section 16

"Auditor to communicate certain matters to Authority
16A (1) An approved auditor of an insurer shall forthwith give
written notice to the Authority if

(a) he resigns before the expiration of his term of office;

(b) he becomes aware that he will be replaced as the
approved auditor of the insurer;

(c) he intends not to seek to be re-appointed; or

(d) he decides to include a material modification of his
report on the insurer's statutory financial
statements and in particular, a material
qualification or a denial of his opinion, or the
statement of an adverse opinion.

(2) Where a notice has been given pursuant to subsection
(1)(d), the auditor shall as soon as practicable thereafter furnish
the Authority with a copy of his report.

(3) No duty to which an auditor of an insurer may be
subject shall be regarded as contravened by reason of his
communicating in good faith to the Authority, whether or not in
response to a request made by the Authority, any information or
opinion on a matter to which this section applies and which is
relevant to any function of the Authority under this Act.

(4) Subsection (3) applies to any matter of which an
approved auditor of an insurer becomes aware in his capacity as
auditor and which relates to the business or affairs of the
insurer or any affiliate of that insurer.

(5) In this section "affiliate" has the meaning given in
section 4F(1).".

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Section 17 of principal Act amended
12 Section 17(3) of the principal Act is amended by deleting "Class
2, Class 3 and Class 4 insurer and every long-term".

Section 18 of principal Act amended
13 Section 18 of the principal Act is amended by repealing
subsection (1) and substituting the following 

" (1) Every insurer shall at the time of filing its statutory
financial statements under section 17, also file with the
Authority a statutory financial return.".

Section 30 of principal Act amended
14 Section 30 of the principal Act is amended

(a) in subsection (1), by deleting "suitable" and substituting
"suitably qualified";

(b) by inserting the following subsections after subsection
(3)

" (4) The inspector may from time to time report to
the Authority on the progress of the investigation and
shall, on completion of the investigation, furnish the
Authority, and the insurer under investigation, with a
copy of his report.

(5) Unless the Authority otherwise directs, the
insurer under investigation shall pay to the Authority all
expenses of, and incidental to, the investigation.".

Section 45 of principal Act amended
15 Section 45 (1)(a) of the principal Act is amended by deleting
"wife" and substituting "spouse".

Section 54 of principal Act amended
16 Section 54 of the principal Act is amended by repealing
subsection (2) and substituting the following

" (2) This section applies to sections 16, 16A, 17(1), (2) and
(3), 24(4), 27(2), 28, 30(2), 43(5) and 49.".