Bermuda Monetary Authority Proposes New Conduct of Business Framework for Insurers
The Bermuda Monetary Authority (BMA) has proposed broadening its Conduct of Business framework to include all insurers engaged in retail business transactions with individual policyholders, irrespective of their location. This move is part of a comprehensive consultation package focused on investment governance and group supervision.
Released on June 9, 2026, the consultation paper invites feedback from stakeholders, with a response deadline of July 27, 2026. The existing Insurance Code of Conduct in Bermuda, revised in 2022, currently mandates business conduct standards solely for domestic market insurers. However, the proposed expansion intends to extend these standards to Bermuda-registered insurers selling products to international clients, exempting foreign affiliates of Bermuda-based insurers or broader insurance groups.
This initiative aims to reduce risks for international policyholders by ensuring they receive protections similar to domestic customers. Insurers affected by these changes will have 180 days from the publication of the final Code to establish compliance measures.
Amendments to the Prudent Person Principle
The BMA has also shared feedback on its previous consultation concerning the Prudent Person Principle (PPP) from December 2024. This includes confirmed amendments to the Code and changes to the Insurance (Group Supervision) Rules 2011. The PPP requires insurers to manage investment risks prudently, ensuring they align with capital resources and obligations.
The BMA notes that some insurers, particularly those in long-term coverage, tend to invest in non-transparent, illiquid assets. The BMA emphasizes that Generally Accepted Accounting Principles (GAAP) compliance alone does not meet PPP requirements, as the principle surpasses GAAP's scope.
Industry feedback advocating for proportionality has led the BMA to personalize compliance evaluations based on individual insurer operations. Despite calls for a separate framework for property and casualty insurers, the BMA asserts that the PPP applies uniformly across sectors, with compliance to the revised Code required by December 31, 2026.
Advancements in Group Supervision Framework
The consultation package includes proposals to advance the group supervision framework, with draft amendments addressing modifications made to the Insurance Act 1978, effective January 7, 2026. These revised rules will be enforced 180 days post-publication.
The BMA has issued a guidance note detailing expectations for investment strategies, asset-liability alignment, risk concentration, and the management of complex assets, effective immediately. As a leading center for captive insurance, Bermuda's regulatory framework, steered by the BMA, significantly impacts both captive and commercial insurers in the region. Stakeholders can access detailed consultation documents via the BMA's document center.