Insurance Amendment Act 2006
INSURANCE AMENDMENT ACT 2006
BERMUDA
2006 : 28
INSURANCE AMENDMENT ACT 2006
Date of Assent: 24 July 2006
Operative Date: 24 July 2006
ARRANGEMENT OF CLAUSES
1 Short title
2 Interpretation
3 Section 1 of the principal
Act amended
4 New sections 1A and 1B
added to principal Act
5 New Part 1A added
6 Section 5 of principal Act
repealed and replaced
7 Section 9 of principal Act
amended
8 Section 11 of principal Act
repealed and replaced
9 Section 29A of principal
Act amended
10 Section 29B of principal
Act amended
11 Sections 29E and 29F of
principal Act repealed
12 Sections 30A to 30J added
to principal Act
13 Section 32 of the principal
Act amended
14 Section 41 of principal Act
amended
15 Sections 42 of the
principal Act amended
16 Section 43 of principal Act
repealed
17 New Part VIIIA added to
principal Act
18 Section 57 of the principal
Act amended
19 New schedule added to
principal Act
WHEREAS it is expedient to make further provisions for the
regulation of the insurance industry;
1
INSURANCE AMENDMENT ACT 2006
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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 2006.
Interpretation
2 In this Act, “the principal Act” means the Insurance Act 1978.
Section 1 of principal Act amended
3 Section 1(1) of the principal Act is amended⎯
(a) by inserting the following new definitions in their
alphabetical order —
““minimum criteria” means the minimum criteria for
registration set out in the Schedule;
“parent company” has the meaning given in section 1B;
“registered person” means a person registered under
either section 4 or section 10;
“subsidiary company” has the meaning given in section
1B, and “subsidiary” has a corresponding
meaning;”;
(b) in the definition of Insurance Advisory Committee by
deleting “established by section 2” and substituting
“mentioned in section 2C”.
New sections 1A and 1B added to principal Act
4 The principal Act is amended by adding the following new
sections after section 1 —
“Meaning of "director", "controller", "chief executive",
"officer", "senior executive", “associate”
1A (1) In this Act, "director", "controller", “chief executive”,
“officer”, "senior executive", and "associate" shall be construed
in accordance with the provisions of this section.
(2) “Director", in relation to a registered person, includes
any person who occupies the position of director, by whatever
name called.
(3) "Controller", in relation to a registered person, means ⎯
(a) a managing director of the registered person or of
another company of which it is a subsidiary
company;
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(b) a chief executive of the registered person or of
another company of which it is a subsidiary;
(c) a person who satisfies the requirements of this
paragraph; or
(d) a person in accordance with whose directions or
instructions the directors of the registered person or
of another company of which it is a subsidiary or
persons who are controllers of the registered person
by virtue of paragraph (c) (or any of them) are
accustomed to act.
(4) A person satisfies the requirements of subsection (3)(c)
in relation to a registered person if, either alone or with any
associate or associates⎯
(a) he holds 10 per cent or more of the shares carrying
rights to vote at any general meeting of the registered
person or another company of which it is a
subsidiary company;
(b) he is entitled to exercise, or control the exercise of 10
per cent or more of the voting power at any general
meeting of the registered person or another company
of which it is such a subsidiary; or
(c) he is able to exercise a significant influence over the
management of the registered person or another
company of which it is such a subsidiary by virtue
of ⎯
(i) a holding of shares in; or
(ii) an entitlement to exercise, or control the
exercise of, the voting power at any general
meeting of,
the registered person or, as the case may be, the other
company concerned.
(5) A person who is a controller of a registered person by
virtue of subsection (3)(c) is in this Act referred to as a
"shareholder controller" of the registered person; and in this
Act—
(a) a "10 per cent shareholder controller" means a
shareholder controller in whose case the percentage
referred to in the relevant paragraph is 10 or more
but less than 20;
(b) a "20 per cent shareholder controller" means a
shareholder controller in whose case that percentage
is 20 or more but less than 33;
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(c) a "33 per cent shareholder controller" means a
shareholder controller in whose case that percentage
is 33 or more but less than 50;
(d) a "50 per cent shareholder controller" means a
shareholder controller in whose case that percentage
is 50 or more;
(6) In subsection (5), "the relevant paragraph" in relation to
a shareholder controller means whichever of paragraphs (a) and
(b) of subsection (4) gives the greater percentage in his case.
(7) "Chief executive", in relation to a registered person,
means a person who, either alone or jointly with one or more
persons, is responsible under the immediate authority of the
directors for the conduct of the business of the registered
person.
(8) “Officer”, in relation to a registered person, includes a
director, secretary, chief executive or senior executive of the
registered person by whatever name called.
(9) "Senior executive", in relation to a registered person,
means a person (other than a chief executive) who, under the
immediate authority of a director or chief executive of the
registered person⎯
(a) exercises managerial functions; or
(b) is responsible for maintaining accounts or other
records of the registered person.
(10) "Associate" in relation to a person entitled to exercise or
control the exercise of voting power in relation to, or holding
shares in, a company, means⎯
(a) if that person is an individual⎯
(i) the spouse, child, step-child or parent of that
person;
(ii) the trustees of any settlement under which that
person has a life interest in possession;
(iii) any company of which that person is a director;
(iv) any person who is an employee or partner of
that person;
(b) if that person is a company ⎯
(i) any director of that company;
(ii) any subsidiary of that company ;
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(iii) any director or employee of any such
subsidiary company;
(c) if that person has with any other person an
agreement or arrangement with respect to the
acquisition, holding or disposal of shares or other
interests in that company or under which they
undertake to act together in exercising their voting
power at any general meeting in relation to it, that
other person.
(11) For the purposes of subsection (10), "settlement"
includes any disposition or arrangement under which property is
held in trust.
Meaning of parent and subsidiary company
1B (1) The expressions "parent company" and "subsidiary
company" in this Act shall be construed as follows.
(2) A company is a parent company in relation to another
company, a subsidiary company, if ⎯
(a) it holds a majority of the voting rights in the
company;
(b) it is a member of the company and has the right to
appoint or remove a majority of its board of directors;
or
(c) it is a member of the company and controls alone,
pursuant to an agreement with other shareholders or
members, a majority of the voting rights in the
company.
(3) For the purposes of subsection (2) a company shall be
treated as a member of another company ⎯
(a) if any of its subsidiary companies is a member of that
company; or
(b) if any shares in that other company are held by a
person acting on behalf of the company or any of its
subsidiary companies.
(4) In subsections (2)(a) and (c) the references to the voting
rights in a company are to the rights conferred on shareholders
in respect of their shares, to vote at general meetings of the
company on all, or substantially all, matters.
(5) In subsection (2)(b) the reference to the right to appoint
or remove a majority of the board of directors is to the right to
appoint or remove directors holding a majority of the voting
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rights at meetings of the board on all, or substantially all,
matters.
(6) A company shall be treated as having the right to
appoint to a directorship if ⎯
(a) a person's appointment to it follows necessarily from
his appointment as director of the company; or
(b) the directorship is held by the company itself.”.
New Part IA added
5 The principal Act is amended by repealing sections 2 and 2A and
by inserting the following new Part IA (sections 2 to 2C) after section
1B —
“PART IA
THE AUTHORITY
Functions and duties of the Authority
Functions of the Authority
2 (1) The Authority shall have the functions and powers
conferred on it by this Act and the duty generally to supervise
persons carrying on insurance business and persons carrying on
business as insurance managers, brokers, agents or salesmen,
for the purpose of protecting the interests of clients and potential
clients of such persons.
(2) It shall also be the duty of the Authority to keep under
review the operation of this Act and developments in the field of
insurance which appear to it to be relevant to the performance of
its functions, the exercise of its powers and the discharge of its
duties.
(3) The Authority shall as soon as practicable after the end
of each of its financial years, make to the Minister and publish in
such manner as it thinks appropriate a report on its activities
under this Act in that year.
Authority’s statement of principles
2A (1) The Authority shall as soon as practicable after the
coming into force of this Act, publish in such manner as it
thinks fit a statement of principles in accordance with which it is
acting or proposing to act—
(a) in interpreting the minimum criteria and the grounds
for cancellation of a registration specified in Part VIII;
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(b) in exercising its powers to register or cancel the
registration of a registered person;
(c) in exercising its power to grant or impose conditions
on a registered person; and
(d) in exercising its power to obtain information, reports
and to require production of documents.
(2) If the Authority makes a material change to the
principles it shall publish a statement of the change or the
revised statement of principles in the same manner as it
published the statement under subsection (1).
Guidance
2B (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.
Insurance Advisory Committee
2C (1) There shall continue to be a committee to be known as
the Insurance Advisory Committee whose function shall be to
advise the Authority on any matter relating to the development of
the insurance industry in Bermuda which the Authority may
refer to it.
(2) The Insurance Advisory Committee shall consist of such
persons (not fewer than five in number) to be appointed by the
Minister, as the Minister may think fit, but so that not fewer
than three members of the Committee shall be persons
appearing to the Minister to be knowledgeable about insurance
business in Bermuda.
(3) The Minister shall appoint a person to be chairman of
the Insurance Advisory Committee.
(4) The Insurance Advisory Committee may advise the
Minister on any matter relating to the development and
promotion of the insurance industry in Bermuda.”.
Section 5 of principal Act repealed and replaced
6 Section 5 of the principal Act is repealed and the following
section substituted ―
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“Factors to be considered by Authority under section 4
5 (1) In considering whether to register a body as an insurer
under section 4, the Authority, without prejudice to its power
under section 12 to refuse registration, must be satisfied that —
(a) the minimum criteria are fulfilled with respect to the
body corporate;
(b) the body has, or has available, adequate knowledge
and expertise; and
(c) the premises intended to be used in the business are
adequate for the conduct of the business.”.
Section 9 of principal Act amended
7 Section 9(1) of the principal Act is amended by deleting “act” and
substituting “carry on business”.
Section 11 of principal Act repealed and replaced
8 Section 11 of the principal Act is repealed and the following
section substituted —
“Factors to be considered by Authority under section 10
11 In considering whether to register a person as an insurance
manager, broker, agent or salesman, as the case may be, under
section 10, the Authority, without prejudice to its power under
section 12 to refuse registration, must be satisfied that —
(a) the minimum criteria are fulfilled with respect to the
applicant; and
(b) the person has knowledge of the insurance business
adequate to enable him to act in the capacity in
which he has applied for registration.”.
Section 29A of principal Act amended
9 Section 29A of the principal Act is amended by repealing
subsection (5).
Section 29B of principal Act amended
10 Section 29B of the principal Act is amended by repealing
subsection (7) and substituting the following subsection —
“(7) In this section, “related company” has the meaning given in
section 29D.”.
Sections 29E and 29F of principal Act repealed
11 Section 29E and section 29 F of the principal Act are repealed.
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Sections 30A to 30J added to principal Act
12 The principal Act is amended by adding the following sections
after section 30 —
“Investigation of suspected contravention
30A (1) Where the Authority has reasonable grounds for
suspecting that a person has contravened section 3 or 9, the
Authority or any duly authorised officer, servant or agent of the
Authority may by notice in writing require that person or any
other person —
(a) to provide, at such place as may be specified in the
notice and either forthwith or at such time as may be
so specified, such information as the Authority may
reasonably require for the purpose of investigating
the suspected contravention;
(b) to produce, at such place as may be specified in the
notice and either forthwith or at such time as may be
so specified, such documents, or documents of such
description, as may be specified, being documents
the production of which may be reasonably required
by the Authority for that purpose;
(c) to attend at such place and time as may be specified
in the notice and answer questions relevant for
determining whether such a contravention has
occurred.
(2) The Authority or a duly authorised officer, servant or
agent of the Authority may take copies of or extracts from any
documents produced under this section.
(3) Any officer, servant or agent of the Authority may, on
producing, if required, evidence of his authority, enter any
premises occupied by a person on whom a notice has been
served under subsection (1) for the purpose of obtaining there
the information or documents required by the notice, putting the
questions referred to in paragraph (c) of that subsection or
exercising the powers conferred by subsection (2).
(4) Any person who without reasonable excuse fails to
comply with a requirement imposed on him under this section or
intentionally obstructs a person in the exercise of the rights
conferred by subsection (3) shall be guilty of an offence and
liable on summary conviction to a fine of $10,000 or to
imprisonment for 6 months or to both.
(5) A statement made by a person in compliance with a
requirement imposed by virtue of this section shall not be used
in evidence against him in criminal proceedings.
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(6) Nothing in this section shall require the disclosure or
production by a person of information or documents which he
would be entitled to refuse to disclose or produce on the grounds
of legal professional privilege in proceedings in Bermuda.”.
Powers of entry
30B (1) A magistrate may issue a warrant under this section if
satisfied on information on oath laid by an officer of the
Authority or laid under the Authority's authority that there are
reasonable grounds for suspecting that a person is guilty of such
a contravention as is mentioned in section 30A and ⎯
(a) that that person has failed to comply with a notice
served on him under that section;
(b) that there are reasonable grounds for suspecting the
completeness of any information provided or
documents produced by him in response to such a
notice; or
(c) that there are reasonable grounds for suspecting that
if a notice were served on him under that section it
would not be complied with or that any documents to
which it would relate would be removed, tampered
with or destroyed.
(2) A warrant under this section shall authorise any police
officer not below the rank of inspector, together with any other
person named in the warrant and any other police officers —
(a) to enter any premises occupied by the person
mentioned in subsection (1) which are specified in
the warrant, using such force as is reasonably
necessary for the purpose;
(b) to search the premises and take possession of any
documents appearing to be such documents as are
mentioned in subsection (1)(c) or to take, in relation
to any such documents, any other steps which may
appear to be necessary for preserving them or
preventing interference with them;
(c) to take copies of or extracts from any such
documents; and
(d) to require any person named in the warrant to
answer questions relevant for determining whether
that person is guilty of any such contravention as is
mentioned in section 30A.
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(3) A warrant under this section shall continue in force until
the end of the period of one month beginning with the day on
which it is issued.
(4) Any documents of which possession is taken under this
section may be retained —
(a) for a period of three months; or
(b) if within that period proceedings to which the
documents are relevant are commenced against any
person for any such contravention as is mentioned in
section 30A, until the conclusion of those
proceedings.
(5) Any person who intentionally obstructs the exercise of
any right conferred by a warrant issued under this section or
fails without reasonable excuse to comply with any requirement
imposed in accordance with subsection (2)(d) shall be guilty of an
offence and liable—
(a) on summary conviction, to a fine of $25,000 or to
imprisonment for six months or to both;
(b) on conviction on indictment, to a fine of $100,000 or
to imprisonment for two years or to both.
Obstruction of investigations
30C (1) A person who knows or suspects that an investigation is
being or is likely to be carried out —
(a) into a suspected contravention of section 3 or section
9; or
(b) under section 30.
shall be guilty of an offence if he falsifies, conceals, destroys or
otherwise disposes of, or causes or permits the falsification,
concealment, destruction or disposal of, documents which he
knows or suspects are or would be relevant to such an
investigation unless he proves that he had no intention of
concealing facts disclosed by the documents from persons
carrying out such an investigation.
(2) A person guilty of an offence under this section shall be
liable —
(a) on summary conviction, to a fine of $50,000 or to
imprisonment for two years or to both;
(b) on conviction on indictment, to a fine of $200,000 or
to imprisonment for five years or to both.
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Notification by shareholder controllers of new or increased
control – private companies
30D (1) This section applies to a shareholder of an insurer whose
shares or the shares of its parent company, if any, are not traded
on any stock exchange.
(2) No person to whom this section applies shall become a
10 per cent, 20 per cent, 33 per cent, or 50 per cent shareholder
controller of an insurer unless —
(a) he has served on the Authority a notice in writing
stating that he intends to become such a controller of
the insurer; and
(b) either the Authority has, before the end of the period
of forty-five days beginning with the date of service of
that notice, notified him in writing that there is no
objection to his becoming such a controller of the
insurer, or that period has elapsed without the
Authority having served him under section 30F with
a written notice of objection to his becoming such a
controller of the insurer.
(3) A notice under subsection (2)(a) shall contain such
information as the Authority may direct and the Authority may
after receiving such a notice from any person, by notice in
writing require him to provide such additional information or
documents as the Authority may reasonably require for deciding
whether to serve notice of objection.
(4) Where additional information or documents are required
from any person by a notice under subsection (3) the time
between the giving of the notice and the receipt of the
information or documents shall be added to the period
mentioned in subsection (2)(b).
(5) In subsection (1) “shareholder” includes a prospective
shareholder.
Notification by shareholder controllers of new or increased
control – public companies
30E (1) This section applies to a shareholder of an insurer whose
shares or the shares of its parent company, if any, are traded on
any stock exchange recognised by the Authority for this purpose.
(2) Not later than forty-five days after a person to whom this
section applies becomes a 10%, 20%, 33% or 50% shareholder
controller of an insurer, that person shall file with the Authority
a notice in writing stating that he has become such a controller.
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(3) In subsection (1) “shareholder” includes a prospective
shareholder.
Objection to new or increased control
30F (1) The Authority may serve a notice of objection under this
section on a person who has given notice under section 30D
unless it is satisfied ⎯
(a) that the person concerned is a fit and proper person
to become a controller of the description in question
of the insurer;
(b) that the interests of clients or potential clients of the
insurer would not be threatened by that person
becoming a controller of that description of the
insurer; and
(c) without prejudice to paragraphs (a) and (b), that,
having regard to that person's likely influence on the
insurer as a controller of the description in question
the minimum criteria would continue to be fulfilled in
the case of the insurer or, if any of those criteria is
not fulfilled, that that person is likely to undertake
adequate remedial action.
(2) Before serving a notice of objection under this section
the Authority shall serve the person concerned with a
preliminary written notice stating that the Authority is
considering service on that person of a notice of objection and
that notice ⎯
(a) shall specify which of the matters mentioned in
subsection (1) the Authority is not satisfied about
and, subject to subsection (5), the reasons for which
it is not satisfied; and
(b) shall give particulars of the rights conferred by
subsection (3).
(3) A person served with a notice under subsection (2) may,
within a period of twenty-eight days beginning with the day on
which the notice is served, make written representations to the
Authority; and where such representations are made the
Authority shall take them into account in deciding whether to
serve a notice of objection.
(4) A notice of objection under this section shall ⎯
(a) specify which of the matters mentioned in
subsection (1) the Authority is not satisfied about
and, subject to subsection (5), the reasons for which
it is not satisfied; and
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(b) give particulars of the rights conferred by section
44A.
(5) Subsections (2)(a) and (4)(a) shall not require the
Authority to specify any reason which would in its opinion
involve the disclosure of confidential information the disclosure
of which would be prejudicial to a third party.
(6) Where a person required to give a notice under section
30D in relation to becoming a controller of any description
becomes a controller of that description without having given the
notice, the Authority may serve him with notice of objection
under this section at any time within three months after
becoming aware of his having done so and may, for the purpose
of deciding whether to serve him with such a notice, require him
by notice in writing to provide such information or documents as
the Authority may reasonably require.
(7) The period mentioned in section 30D(2)(b) (with any
extension under subsection (4) of that section) and the period
mentioned in subsection (6) shall not expire, if it would
otherwise do so, until twenty-eight days after the end of the
period within which representations can be made under
subsection (3).
Contraventions by controller
30G (1) Subject to subsection (2), any person who contravenes
section 30D by ⎯
(a) failing to give the notice required by subsection (2)(a)
of that section; or
(b) knowingly becoming a controller of any description
to which that section applies before the end of the
period mentioned in subsection (2)(b) of that section
in a case where the Authority has not served him
with a preliminary notice under section 30F(2);
shall be guilty of an offence.
(2) For the purposes of subsection 1(b), a person knowingly
becomes a controller of any description if he knows of the acts or
circumstances by virtue of which he became a controller of the
relevant description.
(3) Any person who contravenes section 30E by failing to
give the notice required by subsection (2) of that section shall be
guilty of an offence.
(4) A person who becomes a controller without knowing of
the acts or circumstances by virtue of which he became a
controller of the relevant description shall not be guilty of an
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offence unless he subsequently becomes aware of the fact that
he has become such a controller and he fails to give the
Authority written notice of the fact that he has become such a
controller within thirty days of becoming aware of the fact.
(5) Any person who ⎯
(a) before the end of the period mentioned in section
30D (2)(b), becomes a controller of any description
to which that subsection applies after being served
with a preliminary notice under section 30F(2);
(b) contravenes section 30D by becoming a controller of
any description after being served with a notice of
objection to his becoming a controller of that
description; or
(c) having become a controller of any description in
contravention of that section (whether before or after
being served with such notice of objection) continues
to be such a controller after such a notice has been
served on him;
shall be guilty of an offence.
(6) A person guilty of an offence under subsection (1) or (3)
shall be liable on summary conviction to a fine of $25,000.
(7) A person guilty of an offence under subsection (5) shall
be liable —
(a) on summary conviction to a fine of $25,000 and in
respect of an offence under paragraph (c) of that
subsection, to an additional fine of $500 for each day
on which the offence has continued;
(b) on conviction on indictment to a fine of $100,000 or
imprisonment for 2 years or to both.
Objection to existing controller
30H (1) Where it appears to the Authority that a person who is a
controller of any description of a registered person is not or is no
longer a fit and proper person to be such a controller of the
registered person it may serve him with a written notice of
objection to his being such a controller of the registered person.
(2) Before serving a notice of objection under this section
the Authority shall serve the person concerned with a
preliminary written notice stating that the Authority is
considering service on that person of a notice of objection and
that notice shall ⎯
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(a) subject to subsection (5), specify the reasons for
which it appears to the Authority that the person in
question is not or is no longer a fit and proper
person as mentioned in subsection (1); and
(b) give particulars of the rights conferred by subsection
(3).
(3) A person served with a notice under subsection (2) may,
within a period of twenty-eight days beginning with the day on
which the notice is served, make written representations to the
Authority; and where such representations are made the
Authority shall take them into account in deciding whether to
serve a notice of objection.
(4) A notice of objection under this section shall ⎯
(a) subject to subsection (5), specify the reasons for
which it appears to the Authority that the person in
question is not or is no longer a fit and proper person
as mentioned in subsection (1); and
(b) give particulars of the rights conferred by section
44A.
(5) Subsections (2)(a) and (4)(a) shall not require the
Authority to specify any reason which would in its opinion
involve the disclosure of confidential information the disclosure
of which would be prejudicial to a third party.
(6) Any person who continues to be a controller of any
description after being served under this section with a notice of
objection to his being a controller of that description shall be
guilty of an offence.
(7) A person guilty of an offence under subsection (6) shall
be liable —
(a) on summary conviction to a fine of $25,000, and to
an additional fine of $500 for each day on which the
offence has continued;
(b) on conviction on indictment to a fine of $100,000 or
imprisonment for 2 years or to both.
Restriction on and sale of shares
30I (1) The powers conferred by this section shall be exercisable
where a person ⎯
(a) has contravened section 30F by becoming a
controller of any description after being served with
a notice of objection to his becoming a controller of
that description;
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(b) having become a controller of any description in
contravention of that section continues to be one
after such a notice has been served on him; or
(c) continues to be a controller of any description after
being served under section 30H with notice of
objection to his being a controller of that description.
(2) The Authority may by notice in writing served on the
person concerned direct that any specified shares to which this
section applies shall, until further notice, be subject to one or
more of the following restrictions —
(a) any transfer of, or agreement to transfer, those
shares or, in the case of unissued shares, any
transfer of or an agreement to transfer the right to be
issued with them, shall be void;
(b) no voting rights shall be exercisable in respect of the
shares;
(c) no further shares shall be issued in right of them or
in pursuance of any offer made to their holder; or
(d) except in liquidation, no payment shall be made of
any sums due from the registered person on the
shares, whether in respect of capital or otherwise.
(3) The Court may, on the application of the Authority,
order the sale of any specified shares to which this section
applies and, if they are for the time being subject to any
restrictions under subsection (2), that they shall cease to be
subject to those restrictions.
(4) No order shall be made under subsection (3) in a case
where the notice of objection was served under section 30F or
30H —
(a) until the end of the period within which an appeal
can be brought against the notice of objection;
(b) if such an appeal is brought, until it has been
determined or withdrawn.
(5) Where an order has been made under subsection (3) the
Court may, on the application of the Authority, make such
further order relating to the sale or transfer of the shares as it
thinks fit.
(6) Where shares are sold in pursuance of an order under
this section the proceeds of sale, less the costs of the sale, shall
be paid into Court for the benefit of the persons beneficially
interested in them; and any such person may apply to the Court
for the whole or part of the proceeds to be paid to him.
INSURANCE AMENDMENT ACT 2006
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(7) This section applies —
(a) to all the shares in the registered person of which
the person in question is a controller of the relevant
description which are held by him or any associate
of his and were not so held immediately before he
became such a controller of the registered person;
and
(b) where the person in question became a controller of
the relevant description as a result of the acquisition
by him or any associate of his of shares in another
company, to all the shares in that company which
are held by him or any associate of his and were not
so held before he became such a controller of that
registered person.
(8) A copy of the notice served on the person concerned
under subsection (2) shall be served on the registered person or
company to whose shares it relates and, if it relates to shares
held by an associate of that person, on that associate.
Notification by registered person of change of controller
30J (1) A registered person shall give written notice to the
Authority of the fact that any person has become or ceased to be
a controller of the registered person.
(2) A notice required to be given under subsection (1) shall
be given before the end of the period of forty-five days beginning
with the day on which the registered person becomes aware of
the relevant facts.
(3) A registered person which fails to give a notice required
by this section shall be guilty of an offence and liable on
summary conviction to a fine of $50,000.”.
Section 32 of the principal Act amended
13 (1) Section 32(1) of the principal Act is amended —
(a) in paragraph (a) —
(i) by deleting “an insurer” and substituting “a
registered person which is an insurer” and by
deleting “the insurer” and substituting “the
registered person”;
(ii) by deleting “or”;
(b) in paragraph (b), by deleting “an insurer” and
substituting “a registered person”;
INSURANCE AMENDMENT ACT 2006
19
(c) by inserting the following paragraphs after paragraph
(b)—
“(c) the minimum criteria is not or has not been
fulfilled, or may not have been fulfilled, in respect
of a registered person; or
(d) a person has become a controller of any description
of a registered person which is an insurer in
contravention of section 30D or has become or
remains such a controller after being served with
notice of objection pursuant to section 30F or
30H;”;
(d) by deleting the tailpiece and substituting the following —
“the Authority may give the registered person such
directions as appear to it to be desirable for
safeguarding the interests of clients and potential
clients of the registered person, and, without
prejudice to the generality of the foregoing, may in
particular give any of the directions mentioned in
subsection (2).”.
(2) Section 32(2)of the principal Act is amended—
(a) by deleting “Those steps are” and substituting “Those
directions are”;
(b) by deleting “and” at the end of paragraph (h);
(c) by inserting “and” at the end of paragraph (i); and
(d) by adding the following paragraph after paragraph
(i)—
“(j) to remove a controller or officer;”.
(3) Section 32 of the principal Act is amended by deleting
“insurer” in every place where it occurs in subsections (7), (8) and (9)
and substituting in each case “registered person”, and by making
appropriate grammatical corrections thereto.
Section 41 of principal Act amended
14 Section 41 of the principal Act is amended —
(a) in subsection (1)(b) —
(i) by deleting the full-stop at the end of paragraph (vii)
and substituting a semi-colon;
(ii) by inserting the following paragraph after paragraph
(vii) —
INSURANCE AMENDMENT ACT 2006
20
“(viii) that any of the minimum criteria is not
or has not been fulfilled, or may not be
or may not have been fulfilled, in respect
of the insurer.”
(b) in subsection (2) by deleting the full stop at the end of the
subsection and inserting “together with a notice giving
particulars of the rights conferred by section 44A”; and
(c) in subsection (3) by deleting “to the Court under section 43”
and substituting “to an appeal tribunal under section 44A”.
Section 42 of the principal Act amended
15 Section 42 of the principal Act is amended —
(a) in subsection (1)(b) by inserting the following paragraph after
paragraph (viii) —
“(ix) that any of the minimum criteria is not or has
not been fulfilled, or may not be or may not have
been fulfilled, in respect of any such persons.”;
and
(b) by repealing subsection (3) and substituting the following —
“(3) In this section, “to carry on business” means to
carry on business in or from within Bermuda as an
insurance manager, broker, agent or salesman, as the case
may be.”.
Section 43 of principal Act repealed
16 The principal Act is amended by repealing section 43.
New Part VIIIA added to principal Act
17 The principal Act is amended by adding the following new Part
(sections 44A to 44E) after section 44 —
“PART VIIIA
APPEAL TRIBUNALS
Rights of appeal
44A (1) A registered person which is aggrieved by a decision of
the Authority —
(a) cancelling its registration under section 41 or 42; or
(b) directing it to remove a controller or officer under
section 32(2)(j);
may appeal against the decision to a tribunal constituted in
accordance with section 44B.
INSURANCE AMENDMENT ACT 2006
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(2) Where ⎯
(a) the ground or a ground for a decision within
subsection (1)(a) is that it appears to the Authority
that the criterion in paragraph 1 of the minimum
criteria is not or has not been fulfilled in the case of
any person; or
(b) the Authority directs the removal of a person as a
controller or officer of a registered person under
section 32 (2)(j);
the controller or officer to whom the ground relates or in respect
of whom the direction is made may appeal to a tribunal
constituted as aforesaid against the finding that there is such a
ground for the decision or, as the case may be, against the
direction for his removal.
(3) Any person on whom notice of objection is served under
section 30F or 30H may appeal to a tribunal constituted as
aforesaid against the decision of the Authority to serve the
notice; but this subsection does not apply to a person in any
case in which he has failed to give a notice or become or
continued to be a controller in circumstances in which his doing
so constitutes an offence under section 30G(1), (3), (4) or (5).
(4) The tribunal may suspend the operation of the decision
appealed against pending the determination of an appeal in
respect of the decision.
(5) The cancellation of a registered person’s registration
pursuant to a decision against which there is a right of appeal
under this section shall not have effect ⎯
(a) until the end of the period within which the appeal
can be brought; or
(b) if such an appeal is brought, until it is determined or
withdrawn.
Constitution of tribunal
44B (1) A tribunal shall consist of a chairman, or, in his
absence, a deputy chairman, and two other members.
(2) The chairman and the deputy chairman shall be
appointed by the Minister for a term not exceeding three years,
and shall be barristers and attorneys of at least seven years’
standing.
(3) During any period of time when the chairman or deputy
chairman is absent from Bermuda or is for any other reason
unable to act, the Minister may appoint another person to act in
his place for the period of his absence or inability to act.
INSURANCE AMENDMENT ACT 2006
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(4) The Minister shall appoint a panel of not less than nine
persons with experience of insurance business to serve as
members of appeal tribunals.
Determination of appeals
44C (1) Where an appeal is brought under the provisions of this
Act the chairman or as the case may be the deputy chairman
shall nominate two other members from the panel of members,
who together with him shall constitute the tribunal which shall
determine the appeal.
(2) On an appeal under sections 44A(1) and (2) the question
for the determination of the tribunal shall be whether, for the
reasons adduced by the appellant, the decision was unlawful or
not justified by the evidence on which it was based.
(3) On any such appeal the tribunal may confirm or reverse
the decision which is the subject of the appeal but shall not have
power to vary it except that where the decision was to cancel a
registration the tribunal may direct the Authority to impose
conditions or issue directions instead.
(4) Notice of a tribunal's determination, together with a
statement of its reasons, shall be given to the appellant and to
the Authority; and, unless the tribunal otherwise directs, the
determination shall come into operation when the notice is given
to the appellant and to the Authority.
Costs, procedure and evidence
44D (1) A tribunal may give such directions as it thinks fit for
the payment of costs or expenses by any party to the appeal.
(2) The Minister may make regulations with respect to
appeals and those regulations may in particular make
provision ⎯
(a) as to the period within which and the manner in
which such appeals are to be brought;
(b) as to the manner in which such appeals are to be
conducted, including provision for any hearing to be
held in private and as to the persons entitled to
appear on behalf of the parties;
(c) as to the procedure to be adopted where appeals are
brought both by a registered person and by a person
who is to be a controller or officer of a registered
person, including provision for the hearing of the
appeals together and for the mutual disclosure of
information;
INSURANCE AMENDMENT ACT 2006
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(d) for requiring an appellant or the Authority to disclose
or allow the inspection of documents in his or its
custody or under his or its control;
(e) for requiring any person, on tender of the necessary
expenses of his attendance, to attend and give
evidence or produce documents in his custody or
under his control and for authorising the
administration of oaths to witnesses;
(f) for enabling an appellant to withdraw an appeal or
the Authority to withdraw its opposition to an appeal
and for the consequences of any such withdrawal;
(g) for taxing or otherwise settling any costs or expenses
which the tribunal directs to be paid and for the
enforcement of any such direction;
(h) for enabling any preliminary or incidental functions
in relation to an appeal to be discharged by the
chairman or, as the case may be, the deputy
chairman of the tribunal; and
(i) as to any other matter connected with such appeals.
(3) Regulations made under subsection (2) shall be subject
to negative resolution procedure.
(4) A person who, having been required in accordance with
regulations made under this section to attend and give evidence,
fails without reasonable excuse to attend or give evidence, shall
be guilty of an offence and liable on summary conviction to a fine
of $10,000.
(5) A person who without reasonable excuse alters,
suppresses, conceals, destroys or refuses to produce any
document which he has been required to produce in accordance
with regulations under this section, or which he is liable to be so
required to produce, shall be guilty of an offence and liable ⎯
(a) on summary conviction to a fine of $25,000 or to
imprisonment for six months or to both;
(b) on conviction on indictment to a fine of $50,000 or
to imprisonment for two years or to both.
Further appeals on a point of law
44E (1) A registered person or other person who has appealed to
a tribunal may appeal to the Court on any question of law
arising from the decision of the appeal by the tribunal and an
appeal on any such question shall also lie at the instance of the
Authority; and if the Court is of the opinion that the decision
INSURANCE AMENDMENT ACT 2006
24
was erroneous in point of law it shall remit the matter to the
tribunal for re-hearing and determination by it.
(2) No appeal to the Court of Appeal shall be brought from a
decision under subsection (1) except with leave of the Court of
Appeal.”.
Section 57 of the principal Act amended
18 Section 57(1) of the principal Act is amended by repealing
paragraph (b) and substituting the following paragraph —
"(b) insurance business carried on by the Bermuda Health
Council (established under the Bermuda Health Council
Act 2004) pursuant to the Health Insurance Act 1970;".
New schedule added to principal Act
19 The principal Act is amended by adding the following
Schedule —
“SCHEDULE (sections 5, 11)
MINIMUM CRITERIA FOR REGISTRATION
1 (1) Every person who is, or is to be, a controller or officer of a
registered person is a fit and proper person to hold the particular
position which he holds or is to hold.
(2) In determining whether a person is a fit and proper person
to hold any particular position, regard shall be had to his probity, to his
competence and soundness of judgement for fulfilling the responsibilities
of that position, to the diligence with which he is fulfilling or likely to
fulfil those responsibilities and to whether the interests of clients or
potential clients of the registered person are, or are likely to be, in any
way threatened by his holding that position.
(3) Without prejudice to the generality of the foregoing
provisions, regard may be had to the previous conduct and activities in
business or financial matters of the person in question and, in
particular, to any evidence that he has—
(a) committed an offence involving fraud or other dishonesty
or violence;
(b) contravened any provision made by or under any
enactment appearing to the Authority to be designed for
protecting members of the public against financial loss
due to dishonesty, incompetence or malpractice by
persons concerned in the provision of banking,
insurance, investment or other financial services or the
management of companies or against financial loss due
to the conduct of discharged or undischarged bankrupts;
INSURANCE AMENDMENT ACT 2006
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(c) engaged in any business practices appearing to the
Authority to be deceitful or oppressive or otherwise
improper (whether lawful or not) or which otherwise
reflect discredit on his method of conducting business;
(d) engaged in or has been associated with any other
business practices or otherwise conducted himself in
such a way as to cast doubt on his competence and
soundness of judgement.
Business to be directed by at least two individuals
2 If a body corporate, at least two individuals shall effectively
direct the business of the registered person.
Composition of board of directors
3 If a body corporate, the directors shall include such number (if
any) of directors without executive responsibility for the management of
its business as the registered person considers appropriate having regard
to the circumstances of the registered person and the nature and scale of
its operations.
Business to be conducted in prudent manner
4 (1) The registered person conducts, or, in the case of a
registered person which is not yet carrying on business, will conduct its
business in a prudent manner.
(2) In determining whether a registered person is conducting
its business in a prudent manner, the Authority shall take into account
any failure by the registered person to comply with the provisions of this
Act and any other provisions of law.
(3) A registered person shall not be regarded as conducting its
business in a prudent manner unless it maintains or, as the case may
be, will maintain adequate accounting and other records of its business
and adequate systems of control of its business and records.
(4) Those records and systems shall not be regarded as
adequate unless they are such as to enable the business of the registered
person to be prudently managed and the registered person to comply
with the duties imposed on it by or under this Act or other provision of
law; and in determining whether those systems are adequate the
Authority shall have regard to the nature and scale of its operations and
the functions and responsibilities in respect of them of any such
directors of the registered person as are mentioned in paragraph 3.
(5) Subparagraphs (2) to (4) are without prejudice to the
generality of subparagraph (1).
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Consolidated supervision
5 The position of the registered person within the structure of any
group to which it may belong shall be such that it will not obstruct the
conduct of effective consolidated supervision.
Integrity and skill
6 The business of the registered person is or, in the case of a
registered person which is not yet carrying on business, will be carried
on with integrity and the professional skills appropriate to the nature
and scale of its activities.”
