The Bermuda Insurance Act 1978

29 Jan 2026

The Bermuda Insurance Act 1978 is a foundational framework governing Bermuda's insurance sector, dealing comprehensively with regulatory oversight and operational standards for insurers, brokers, agents, and other key entities involved in the industry. The Act’s primary objective is to safeguard the interests of clients and potential clients, ensuring robust consumer protection while fostering a well-regulated and resilient insurance environment. To achieve this, the Bermuda Monetary Authority (BMA) is entrusted with supervisory authority, granting it the power to monitor compliance, enforce regulations, and uphold prudential standards.

Registration, solvency, and local oversight

One of the Act’s fundamental features is the obligation it places on insurers to register with the BMA. This process ensures that entities meet stringent criteria before engaging in insurance activities, including compliance with financial solvency and regulatory capital requirements. Insurers are required to maintain balance sheets reflecting their ability to meet ongoing obligations, adhere to defined technical standards, and secure approval through the appointment of qualified auditors and, in some cases, approved loss reserve specialists. Further cementing Bermuda’s position as a well-regulated jurisdiction, the Act mandates insurance providers to keep their head offices within the territory, reinforcing the local oversight of operations.

Emphasis on transparency, accountability, and governance

Transparency and accountability are embedded through the requirement for insurers and intermediaries to file statutory financial statements and returns annually. This approach is bolstered by obligations to submit declarations of solvency compliance and audited financial reports prepared in accordance with prescribed standards, such as International Financial Reporting Standards (IFRS). The role of corporate governance is also emphasised, requiring insurers to adopt policies commensurate with the nature, size, and complexity of their operations, ensuring sound management practices across the sector.

Robust policyholder protection measures

The Act is equally stringent concerning policyholder protection. It prohibits insurers from engaging in non-insurance business activities unless deemed ancillary to their insurance functions, defining boundaries for operational focus. Policyholders gain further reassurance through provisions requiring insurers to avoid misleading advertisements or practices, with intermediaries held personally liable for policies arranged with unregistered insurers.

Adaptive legislation through amendments and updates

Amendment mechanisms make the Act a living document, capable of evolving with industry demands. Significant revisions have introduced enhanced capital requirements and prudential standards specifically tailored to insurers’ operating group structures. Other adjustments encompass the introduction of group supervision to regulate interconnected entities effectively and the incorporation of rules aimed at handling cyber reporting events, reflecting modern threats to operational stability.

Enforcement mechanisms and supervisory powers

The enforcement mechanisms conferred upon the BMA are notably robust. The Authority possesses extensive investigative powers, enabling it to request information, examine pertinent records, and initiate inquiries into regulatory contraventions. It can impose civil penalties, issue public censures, or, where necessary, serve prohibition orders to protect the marketplace’s integrity. Insurers failing to meet solvency margins face intervention measures, including asset maintenance directives or restrictions on dividend payments to safeguard creditors and policyholders.

Shareholder control and operational changes oversight

Furthermore, the Act defines clear processes regarding the control of shareholder stakes in insurers, mandating notifications to the Authority for prospective changes in ownership. It also governs material changes in business operations, requiring timely disclosure to the BMA to maintain continuous oversight.

Commitment to leadership and evolving standards

By combining detailed regulatory stipulations with enforcement authority, the Insurance Act 1978 establishes a highly structured regulatory framework. It demonstrates Bermuda’s commitment to being a global leader in the insurance sector, where the interests of markets and consumers are expertly balanced with the need for efficiency, innovation, and growth. Through its provisions, the Act continues to adapt, ensuring its relevancy in addressing contemporary challenges and safeguarding the robust functioning of Bermuda’s insurance industry.

Further reading