Registrar Lennox McCartney presented remarks to participants in the recent Bahamas Briefing 2008:
*It is my pleasure to address you today on activities of the office of the Registrar of Insurance. The office is responsible for the supervision of companies and individuals that carry on insurance business in and from the Bahamas.*
The Office is a unit within the Ministry of Finance. The Minister of State, Minister Laing, is the Minister responsible for insurance.
The office regulates both the domestic and international insurance business in The Bahamas.
The office is governed by two acts: one for the domestic insurance activities and one for the international insurance activities. The office is responsible for regulatory activities relating to entrances and exits in the insurance business, regulation of financial capital and solvency and regulation of market conduct activities. The office is staffed by 20 employees with varies academic degrees, skills and backgrounds in insurance, finance, accounting and business.
The office has allocated dedicated staff members to process new applications in order to give the desired focus to these new licensees. We are currently, on average, processing applications within 60 days; once all of the required information is in hand.
The office is an active member of international insurance supervisory associations such as the IAIS – the International Association of Insurance Supervisors, OGIS – the off-shore group of insurance supervisors and the Caribbean Association of Insurance Regulatory. These affiliations provide the office with some influence over the development of new insurance industry standards. The staff is continuously updated on insurance, finance and insurance regulatory matters by attending training courses and seminars both locally and abroad.
**A few statistics as at Dec 2007…**
The Bahamas has a vibrant domestic insurance industry and a promising international insurance industry.
There are 71 Insurance companies, which include 29 insurers, 16 captives and 26 insurers operating as branches in The Bahamas.
In additional to insurers there are 86 intermediaries (agents & brokers) and 1,500 sales persons and 9 underwriting managers.
Total gross premiums of insurers were 740 million dollars and total assets of 2.2 billion dollars.
Premium penetration, that is gross premiums over GDP, was 11.4%. This places The Bahamas within the top 10 highest in the world. Behind the countries like Taiwan who had the highest penetration in 2007 at 15.7%. Some of the other countries in the top 5 were UK, South Africa, Netherlands, and South Korea who had a penetration of 11.8%.
Focusing on the international insurance business: in 2007 there were 33 international licensees of whom 16 were captives insurers, 9 were underwriting managers, 4 intermediaries, and 4 open market insurers. The numbers include pure captives, group captives and a captive cell company. 38 percent of the captives wrote third party liability insurance coverage. The total gross premium from the international insurers was 39 million dollars with total assets of approximately one billion dollars. A number of insurers concentrate on the wealth management products.
International life insurance companies require by statute a minimum capital of 200,000 dollars and non-life insurers require a minimum capital of $100,000 as a general rule plus 20% of premium income up to 7 million dollars plus 10% of premium income in excess of 7 million. While these are minimum requirements, the actual capital required will depend on the details of the proposed business.
The regulatory world of financial services is constantly changing. This is also so for The Bahamas’ insurance industry.
Pieces of legislation for both the domestic and the international insurance business are in the process of being updated. The new Domestic Insurance Act was passed and is waiting for the completion of Regulations before being brought into force. Final comments from the industry are due soon. We are not anticipating any significant change.
The External Insurance Act, which governs the international insurance business, is in the process of being reviewed by the industry before enactment. It was decided not to apply a patch work of changes to the existing legislation but to implement a totally new act. The purpose of this new act is to repeal the External Insurance Act, and replace it with a more modern, up-to-date, and user-friendly legislation and a regulatory framework within which external insurance business may be operated in and from The Bahamas while maintaining the competitive benefits of the existing legislation. The new act will incorporate international best practices so that The Bahamas would be considered a regulatory equivalent jurisdiction as these criteria are being finalized by the solvency II insurance industry discussion that is taking place in the EU and that will take place in other jurisdictions.
We are looking forward to the implementation of the new legislation. We believe that, when implemented, the new Acts will positively position The Bahamas’s international and domestic insurance industry.