As an update to last week's column, I decided to talk to Shelby Weldon, Assistant Director of Insurance (formerly Inspector of Companies) to discuss the further changes to the Insurance Act as a result of the KPMG report.

In 2000, KPMG, one of the large accounting firms, undertook a review "to assess the Caribbean, Overseas Territories and Bermuda's performance against international standards and good practice and to make recommendations for improvement where any territory falls below those standards" for the UK government.

The main reason the UK government initiated this study is the potential for outsiders to use overseas territories as money laundering centres and it wanted to ensure that proper procedures were being adhered to prevent money laundering from occurring. Consequently, KPMG reviewed all financial institutions in Bermuda including insurance, banking, trusts, etc.

In general Bermuda fared well from this review. However, in the review KPMG felt there was a huge conflict of interest created by having the Registrar of Companies report to the Minister of Finance. They felt the Registrar of Companies should be removed from the political arena and placed in the hands of an independent regulatory body.

Bermuda responded swiftly to the recommendation of KPMG by first removing the responsibility for overseeing insurance companies from the Minister to the newly created position of the Supervisor of Insurance.

As a result, the Insurance Act was amended to abolish the position of the Registrar of Companies in relation to insurance activities and to create the position of the Supervisor of Insurance. Therefore, Jeremy Cox relinquished his title of Registrar of Companies and officially became known as the Supervisor of Insurance. This change occurred in early 2001.

According to Weldon, this change in reporting officially put into law the practice of independent reporting that had been taking place all along.

The second part of the change took effect January 1, 2002 when full responsibility for regulating the insurance industry was moved from the Minister of Finance to the Bermuda Monetary Authority.

Once again, the Insurance Act was amended to incorporate this change of reporting into it. Therefore, the Supervisor of Insurance and his team was officially moved to the Bermuda Monetary Authority as of January 1, 2002.

As a result of these changes, I asked Weldon how his role has changed. Aside from a title change, Weldon's title has changed from Inspector of Companies to Assistant Director of Insurance, he says his day to day role has not changed at all. Because his department is now under the Bermuda Monetary authority, he must now report to the Chairman, the Executive team, and the Board of Directors as they all oversee his responsibilities. Weldon must provide monthly reports on what has been happening under his watch including but not limited to new company incorporations, seminars, any regulatory issues he has with companies and any other important issues facing the insurance industry on a day-to-day basis.

Weldon is not new to the insurance industry having worked as an account manager for years at J&H before leaving the industry to venture on his own. After leaving the industry, he opened a small retail shop with his sister, who ran the operation while he tended the books. He also provided accounting services to a few private clients on the side as he is an accountant by trade.

In 1995, Weldon was seconded to the Registrar's office to work on what he thought would be a six week contract to help the Registrar's office regulate the changes brought into effect by the 1995 Insurance Amendment Act (refer to last week's column for summary of changes). That contract extended to six months. Seven years later, he is still at the Registrar's office but is now the Assistant Director of Insurance and loving every minute of it. He says he is exposed to many high level professionals, extensive company information and is privy to a lot of privileged information. The learning curve for him has been phenomenal.

Weldon says of his seven years, that last year was the most exciting as a result of the recommendations put forward by the KPMG report which caused changes to be made to the reporting requirements to the Bermuda Monetary Authority, the physical relocation of his office, and all of the new company incorporations. He says these changes have created the desire in him to provide an even better service to his customers (including the major insurance companies incorporating here). He knows Bermuda is being viewed under a microscope so he works hard to ensure all the necessary procedures have been followed to the letter and proper company documentation is in place.

Despite the record number of incorporations, Weldon says that from a regulatory perspective, the process has not so much been challenging as it is rewarding. The standard of applications has definitely improved because the majority of applications to incorporate came from very significant players whose business proposals were spot on. He congratulates the people who brought the applications to the table for the superb job they did in putting them together. Their fine effort made his job a lot easier. Consequently, his team is proud that such good quality companies have chosen to incorporate in Bermuda through them. "That part of the job is very rewarding," says Weldon.

Weldon says Bermuda's reputation has improved over the years with outside reviewers. Despite Bermuda constantly being attacked by outside sources, he says when he speaks to CEOS of large companies; Bermuda continues to be held in high regard.

It is for this reason that the Supervisor of Insurance, Jeremy Cox, has chosen to stay out of the defensive game whenever Bermuda's regulatory environment is attacked, choosing instead to let the numbers and results speak for themselves.

Cathy Duffy is a Chartered Property Casualty Underwriter (CPCU) and is not a freelance underwriter. She is a former executive of Zurich Global Energy and has 15 years experience in the insurance industry. She writes on insurance issues in The Royal Gazette every Monday. Feedback crdufycwbda.bm.