Section 6G of the Insurance Act - Recovery planning: it is not too late to get your affairs in order!

Key areas of restructuring plan include:

• Operational Mapping: A well-crafted recovery plan must begin with a clear understanding of the institution’s legal and operational structure, core business lines, and critical services. These include everything from claims administration and investment management to support functions like IT and HR. Properly mapping these elements helps ensure business continuity by identifying which functions must remain operational during times of stress.
• Governance Design: There must be clearly defined roles, responsibilities, and escalation protocols. The board should approve and oversee the plan, while senior management typically led by a designated executive takes operational ownership. A crisis management committee, supported by processes and controls, should be prepared to activate the plan swiftly when needed. These governance structures must be tightly aligned with the institution’s broader enterprise risk management framework to avoid fragmentation during a crisis.
• Strategic Risk Assessment: This involves evaluating both financial and operational risks under a variety of stress conditions. A calibrated trigger framework should be developed, using both quantitative and qualitative indicators to detect early signs of distress. These indicators ranging from solvency ratios to reputational concerns enable institutions to anticipate issues and escalate responses before a crisis escalates.
• Recovery Options: These are pre-identified actions such as raising capital, increasing liquidity, selling business units, or temporarily halting new business. They should be rigorously assessed for feasibility and effectiveness. A credible plan will consider the timing, operational impact, and strategic implications of each option, along with contingency measures in case key dependencies fail.
• Scenario Testing: By applying severe but plausible stress scenarios both institution-specific and market-wide, insurers can test the strength of their trigger frameworks and the viability of proposed recovery measures. Scenario analysis should be complemented by regular simulations to ensure that governance mechanisms, communication channels, and operational protocols hold up under pressure.
• Communication Planning: The plan must include strategies for timely, clear, and consistent communication with all key stakeholders internally and externally. This includes regulators, staff, policyholders, media, and investors. Communication plans should be scenario-specific and identify not only what needs to be said, but who says it, when, and how.
• Ongoing Review: The plan must evolve alongside the institution’s business model, risk profile, and operating environment. Regular updates, ideally at least every three years or in response to material changes, help ensure the plan remains actionable.

This approach is grounded in global standards but customized for each insurer’s unique context. The goal is not only compliance, but resilience, ensuring insurers are prepared to respond quickly and effectively to financial stress.

A Proactive Step Forward

The introduction of the Act marks a proactive evolution of Bermuda’s regulatory landscape. With Deloitte’s guidance, insurers can build forward-looking recovery plans that not only meet new requirements but also reinforce long-term operational stability.

How we can assist?

With deep expertise in risk management, financial advisory, internal audit, and regulatory compliance, our offering is a one-stop shop providing end-to-end support to insurance companies as they prepare for implementation and the ongoing updating of their recovery plans.

We provide deep industry insights to help you navigate complex regulations and strengthen your risk management framework, ensuring agility and long-term success in Bermuda’s evolving financial landscape.