Introduction

Bermuda law prohibits any person, in or from Bermuda, from carrying on business as an insurance broker or agent unless they are registered to do so by the Bermuda Monetary 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 policyholders, whereas an 'agent' is a person who, with an insurer's authority, acts on its behalf in relation to:

  • the initiation and receipt of proposals;
  • the issue of policies; and
  • the collection of premiums.

There are currently 95 brokers and 59 agents registered in Bermuda.

New code of conduct

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 that registered brokers and agents must comply with – for example:

  • controllers and officers must be fit and proper;
  • a corporate governance framework must be implemented;
  • business must be conducted in a sound and prudent manner (eg, brokers and agents must have an appropriate physical presence in Bermuda);
  • adequate accounting, record-keeping systems and reporting requirements must be in place;
  • brokers and agents must maintain high standards with respect to client relationships;
  • brokers and agents must have appropriate disclosure requirements;
  • brokers and agents must implement policies and procedures with respect to:
    • conflicts of interest;
    • complaint handling;
    • business continuity and disaster recovery;
    • applicable anti-corruption and anti-money laundering and anti-terrorist financing laws; and
    • reputational risk;
  • outsourced operations must be performed at the same level as if the work were performed in-house and comply with Bermuda's legal and regulatory requirements; and
  • brokers and agents must cooperate 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 business' collective nature, scale and complexity.

Comment

The code came into effect on publication, with all existing brokers and agents having until 1 January 2020 to ensure compliance.

This article was first published by The European in July 2019.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.