The Bermuda Monetary Authority is proposing new rules aimed at providing a clearer picture of risks within the island’s largest international insurance groups, including whether money can be moved quickly between companies during a crisis.

The proposals would apply to internationally active insurance groups, known as IAIGs — large insurers with operations across several countries. Bermuda is the group-wide regulator for three of the 59 such groups identified worldwide as of July, meaning the new rules would apply initially to only these groups.

The three groups are Aegon Ltd, Arch Capital Group Ltd and Athora Holding Ltd, according to the register of IAIGs kept by the International Association of Insurance Supervisors.

The BMA said the rules would bring Bermuda further into line with international standards set by the International Association of Insurance Supervisors.

They would not replace the existing rules for insurance groups. Instead, they would add more detailed expectations for the parent company or any other entity responsible for overseeing the whole group.

The regulator wants that entity to provide a fuller, consolidated view of how the group operates, including its corporate structure, major shareholders, important business lines and connections between its companies.

It would also have to alert the BMA to major changes, such as a restructuring, a shift in strategy, changes to risk limits or a major change in business activity.

A central focus of the consultation is liquidity, or whether these insurers have enough readily available cash or assets they can quickly turn into cash to pay claims and other obligations.

The BMA proposes that groups should test how they would cope with severe but plausible strains, including market disruption or a problem at one of their companies.

Importantly, the tests would need to consider whether cash and assets held in one country could actually be moved to another part of the group. Legal, regulatory and operational barriers can make that difficult during a period of stress.

Groups would also need plans setting out the practical steps they could take if they faced a cash shortfall. The BMA may ask them to keep a file of evidence on their liquidity position, stress tests, available resources and emergency funding plans.

The proposals would also tighten the focus on transactions within a group. These can include loans, reinsurance arrangements, investments and shared services between companies. The BMA said such links can allow problems at one company to spread through the wider group.

Insurance groups would be expected to monitor major internal exposures and tell the BMA promptly about significant transactions or risk concentrations.

The consultation also includes expectations for investments, particularly complex or difficult-to-sell assets. Groups would be required to assess their own investment risk instead of relying on ratings agencies or other third parties.

Boards would get more frequent reporting from group-wide risk and compliance teams, while internal controls would have to be independently tested at least once a year.

The BMA said many of the expectations are in supervisory practices already used in its oversight of internationally active groups. The new rules will make those expectations clearer and more consistent.

The consultation closes on September 30. The authority is aiming for publication of final rules in the fourth quarter of this year.