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Proposed recovery planning rules
A recovery plan should be integrated within the insurer’s overall Enterprise Risk Management (ERM) framework and should be pre-emptive in nature. The intent is for recovery planning to complement other ERM tools already available to insurers, such as the Commercial Insurer’s Solvency Self-Assessment (CISSA).
An insurer may leverage the existing tools within its ERM framework as a source of input when drafting and developing the recovery plan given that the objectives of some of the insurer’s existing ERM tools, to a certain extent, may overlap with the objectives of the recovery planning.
The Authority will have appropriate powers to evaluate and challenge the robustness and soundness (e.g., credibility, depth, strength, governance) of the insurer’s recovery plan.
Every recovery plan prepared by an insurer, insurance group or internationally active insurance group (an entity) shall include, but is not limited to, the following matters:
- An executive summary, which provides an overview of the manner in which the recovery plan is intended to ensure that the entity will recover from severe stress scenarios;
- A description of the entity, which includes but is not limited to— (i) Its legal structure; (ii) The insurance business carried on; (iii) Key financial arrangements in place; and (iv) Business operations;
- A description of the criterion proposed to be utilised by the entity that will require the implementation of any aspect of the recovery plan;
- A description of the entity’s governance policies and processes for recovery planning and implementation of the recovery plan or any updated recovery plan;
- Confirmation of the various methods proposed to be utilised by the entity to enable it to recover from severe stress scenarios;
- The stress scenarios to be used by the entity in assessing the credibility and feasibility of its recovery plan and the timing such is to be performed; and
- The communication strategy proposed to be utilised by the entity to enable it to communicate with all relevant stakeholders before, during and after the recovery plan has come into effect.
What Next?
The Authority invites stakeholders to contribute their views on the Proposed Recovery Planning Rules. Stakeholders should send comments to FSRD@bma.bm no later than the close of business on 21 July 2023. Following a review of the public consultation feedback, the Rules will be finalised and will come into effect twelve months after being published.
How can we help?
Recovery Planning rules are already in place in many other jurisdictions, including those recently inforce from the Central Bank of Ireland. Grant Thornton’s experienced financial services professionals have significant experience in recovery planning; including drafting Recovery Plans, performing gap analysis, and carrying out independent reviews and can leverage this knowledge and know how to ensure best practices and learnings are incorporated in your organisation.
We recommend that companies for whom these rules relate promptly assess their preparedness.
If you would like to know more, contact Andrew Howie, Tanya Beattie or your usual Grant Thornton contact.
