Insurance laws Bahamas
The insurance industry in The Bahamas is a significant part of the country's financial services sector, regulated by a comprehensive legal framework designed to protect policyholders and maintain financial stability.
Regulatory Authority
The primary regulator is the Insurance Commission of The Bahamas (ICB), established under the Insurance Act, 2005. The ICB is an independent supervisory body responsible for:
Prudential supervision of all insurance activities within and from The Bahamas.
Licensing and oversight of insurers, reinsurers, agents, brokers, and other intermediaries.
Enforcing compliance with relevant legislation, including anti-money laundering and counter-terrorism financing laws.
Ensuring the solvency of companies and protecting the interests of the public.
Key Legislation
The foundational laws governing the insurance industry in The Bahamas include:
The Insurance Act, 2005: This is the main piece of legislation for domestic insurance business. It outlines the requirements for company registration, capital and solvency standards, corporate governance, and the rights and duties of policyholders.
The External Insurance Act, 2009: This act specifically governs companies that underwrite risks located outside of The Bahamas, often known as "external" or "captive" insurance. It provides a legal framework for these international operations, which are a major component of the country's financial services.
The National Insurance Act, 1972: This act establishes the national social security system, which is distinct from the private insurance market. It provides for benefits such as sickness, maternity, retirement, and death payments.
Domestic vs. External Insurance
The legal framework makes a clear distinction between domestic and external insurance:
Domestic Insurance: This refers to policies covering risks located within The Bahamas. These companies are subject to the regulations of the Insurance Act, 2005.
External Insurance: This business involves risks located outside of The Bahamas. The External Insurance Act, 2009, provides the framework for these companies, which are a key part of the country's international financial services. The External Insurance Act is designed to be flexible and efficient for captives and other forms of international insurance.
Key Principles and Requirements
Non-Admitted Insurance: Generally, it is illegal for a person in The Bahamas to take out insurance with a company not registered in the country. Exceptions exist for reinsurance and for certain risks that cannot be covered by the domestic market.
Licensing and Registration: All entities conducting insurance business—whether as an insurer, broker, agent, or adjuster—must be licensed by the ICB. The application process requires detailed information on the company's structure, financial status, and business plan.
Capital and Solvency: The laws mandate specific minimum capital requirements and solvency margins for all licensed companies to ensure they can meet their obligations to policyholders.
Consumer Protection: The laws contain provisions to protect consumers, including requirements for insurers to deliver policies and specific rules regarding policy cancellation, surrender values, and non-forfeiture.
Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF): In line with international standards, the insurance sector is subject to stringent AML and CTF regulations. Companies are required to conduct customer due diligence (CDD) and report suspicious transactions to the Financial Intelligence Unit (FIU).
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