Bill gives people more protection from insurers
People with insurance will now have more protection in the event they have to make a policy claim, under a new bill passed in the House of Assembly.
The Insurance Amendment (No.3) Act 2010 requires that insurers have enough funds to satisfy regulatory levels so there is a basic amount of money available when people are ready to make a claim.
It will also extend the powers of the Bermuda Monetary Authority allowing them to investigate other classes of insurers and establish a new regime for the classification of long-term insurers, said
Premier and Finance Minister Paula Cox in the House of Assembly on Friday.
She said: “The purpose of this bill is to provide enhanced policyholder protection by ensuring that insurers have capital resources eligible to satisfy their regulatory capital requirements level.
“Eligible capital is a critical element of the programme of regulatory change advocated by regulatory setting bodies such as IAIS and now being adopted by various jurisdictions including the European Union and would likely be a key component of jurisdictionally equivalent assessments.”
Shadow Finance Minister Bob Richards said: “I understand in reference to my speech before lunch this is one of those regulatory initiatives that I think has been initiated of the sector itself or is certainly being done in concert with the insurance sector. They have said this is in keeping with the world we live in.”
Mr Richards said before the financial crisis two years ago, people thought insurance institutions were “very solvent”.
But now that people know otherwise, Government must “keep a close eye on the solvency of institutions under its care”.
“I think this is sort of bringing the life insurance area into the sort of supervisory thinking that is already there in property, casualty and liability insurance areas and quite frankly the long-term businesses have a higher risk profile than in short-term.”
Opposition MP Grant Gibbons said he was in support of the move to classify long-term insurers into a number of sub-groups.
The Ministry of Finance had proposed the creation of five new classes of long-term insurers, from Class A to B.
Class B are those companies where the insurer is wholly owned by two or more unrelated persons and intends to carry on long-term business where not less than 80 percent of that business is related to the group.
While Class E companies are where the insurer has total assets of more than $500 million and is not registrable as a Class A or B insurer.
Still Dr Gibbons said there was a number of issues that still needed to be looked at, considering the demands of insurers often changed depending on what jurisdiction one was in.
He said: “It is still a moving target, it is difficult, it is complex.”