There are only 9 days until all licensed insurers are required to comply with the Cayman Islands Monetary Authority’s (“CIMA”) new Rule on Corporate Governance (the “Rule”) (which replaces the Rule on Corporate Governance for Insurers (2016)) and the Rule and Statement of Guidance on Internal Controls (the “Rule & SOG”, and together with the Rule, the “Rules”).
Although insurers will already have sophisticated governance programs in place given they have been subject to the existing Rule on Corporate Governance for Insurers, there are some notable revisions which need to be considered and addressed by 14 October 2023*:
- Requirement for establishment of an Audit Committee;
- Revisions to (or adoption of) Conflict of Interest Policy;
- Adoption of a Code of Conduct;
- Revisions to (or adoption of) procedures relating to resignation, termination and disqualification procedures for directors and senior management;
- Potential revisions to Remuneration Policy.
Insurers should review their current corporate governance policies and perform a gap analysis exercise to identify the necessary revisions to their existing policies, adopt new policies/documents to address the above requirements if not already contemplated by the insurer’s corporate governance framework, and establish and appoint an audit committee, with authority delegated from the Board pursuant to an appropriate charter.
Insurers were already subject to the existing Rule on Internal Controls and the Statement of Guidance on Internal Controls for Insurers. However, the requirements are significantly bolstered under the new Rule & SOG. Insurers should review their current internal controls against the new Rule & SOG and make any necessary adjustments to improve their controls and ensure compliance with the Rule & SOG.
To the extent an insurer’s policies and procedures already meet the requirements of the new Rules, we would still recommend that a meeting be called for the directors to confirm they have reviewed the Rules and have satisfied themselves that the current policies address the new requirements.*
*The Authority has confirmed to the Insurance Managers Association of Cayman (IMAC) that where an insurance licensee’s corporate governance framework has been drafted/updated but will not be adopted by the Board prior to 14 October 2023, the insurer should notify the Authority when the updated corporate governance framework would be adopted by the Board.
Conyers would be happy to assist with preparing and updating policies/documents to address the requirements of the Rules, preparing a Code of Conduct, a Charter for the Audit Committee and assisting with the necessary Board resolutions addressing these items. If you have any questions on the new Rules, please reach out to one of the Conyers contacts listed below.
CIMA Enforcement Powers
A breach of the Rules could result in enforcement action by CIMA. CIMA’s policies and procedures contained in its Enforcement Manual will apply to a breach of the Rules, in addition to any other powers provided under the regulatory acts and the Monetary Authority Act.
Reminder – Revised Rule and Statement of Guidance on Reinsurance Arrangements
Insurers should also review their reinsurance arrangements and strategy against the revised Rule and Statement of Guidance on Reinsurance Arrangements, which comes into effect in May 2024.