The Tribune

By FAY SIMMONS

TRIBUNE Business Reporter

jsimmons@tribunemedia.net

INSURANCE companies and auditors have been warned to improve the accuracy and transparency of premium tax disclosures, the industry’s regulator revealed yesterday.

Insurance Commission of The Bahamas executives told the Bahamas Institute of Chartered Accountants (BICA) accountants’ week seminars that they have identified significant discrepancies between insurers' quarterly premium tax cover notes and figures reported in their audited financial statements.

Yulanda Forbes-Fowler, deputy manager of insurance supervision, said regulators were reviewing annual premium tax reconciliations and found that the gross written premiums disclosed in quarterly submissions frequently did not match those reported in audited accounts, raising concerns about the accuracy of financial information being provided to the regulator.

“There are some instances where there may be small differences due to timing and reporting, but for the most part, the differences are very big differences,” she said.

The Commission issued a public notice in January 2026 requiring insurers to disclose gross written premium income in their audited financial statements for both the current and previous financial years. The disclosures are intended to capture total gross written premiums earned during the year and identify reconciling differences arising from timing and reporting.

Mrs Forbes-Fowler said auditors must ensure financial disclosures distinguish between an insurer's Bahamas operations and those of its wider corporate group, particularly where audited statements consolidate the financial performance of multiple entities.

“We ask that you do separate The Bahamas operations from any group of companies' operations,” she said, noting that the Insurance Commission's primary concern was the business conducted in The Bahamas.

Mrs Forbes-Fowler also highlighted the need for clearer disclosures surrounding reinsurance arrangements, including premiums ceded to reinsurers and reinsurance assumed from other primary insurers. 

She said the Commission has encountered instances where insurers and reinsurers have taken differing positions over which party is responsible for paying premium tax on particular premiums.

“We ask that that information is disclosed in the audited financials as well, and we ask that it's clear,” said Mrs Forbes-Fowler.

She acknowledged that the Commission recognised difficulties within the industry over premium tax reporting, and said further guidance on the preparation of these disclosures will be issued effective 2027.

The concerns form part of a wider push by the regulator to improve financial reporting and transparency among insurers, with Mrs Forbes-Fowler identifying late submissions, incomplete returns and erroneous financial information as continuing supervisory challenges.

Insurance companies are required to submit quarterly returns and risk-based capital adequacy reports within 45 days of the end of each quarter, while quarterly premium tax cover notes must be filed within 30 days. Audited financial statements are due within four months of the financial year-end, while annual premium tax reconciliations must be submitted by February 28.

Mrs Forbes-Fowler warned that companies could face fines of up to $10,000 for late filings under the Insurance Act, with continuing offences attracting an additional $1,000 for every day the offence persists.

The Commission allows insurers to request extensions, but applications must be submitted at least ten days before the relevant deadline. Such requests are considered on a case-by-case basis and are not automatically approved.

She also warned that submitting a return by the deadline does not necessarily mean an insurer has fulfilled its reporting obligations if the information is incomplete or inaccurate.

“If I have to keep sending it back to you or asking you to resubmit, there may be instances where you may incur a penalty,” Mrs Forbes-Fowler said.

Among the deficiencies identified by the Commission are quarterly returns containing incomplete sections, discrepancies between figures presented in different financial statement schedules and significant movements in balance sheet or income statement items without supporting explanations.

Mrs Forbes-Fowler urged insurers to provide detailed commentary explaining material financial movements, warning that repeated inaccurate submissions could attract closer scrutiny from the regulator.

The Commission's wider supervisory push also includes a shift towards a risk-based capital framework, which requires insurers to hold capital according to the risks associated with their individual businesses rather than relying solely on fixed minimum amounts.

Gabrielle Moss-Missick, an actuary at the Insurance Commission, said the framework officially launched in January 2026 following a period of consultation, replacing the previous one-size-fits-all approach under which long-term insurers were required to maintain minimum capital of $3m and general insurers $2m.

Under the revised system, required capital is determined by the risk profile of each insurer, meaning companies with greater exposure to certain risks may be required to maintain higher capital levels. “The more risky you are, the more your required capital level is going to be,” Mrs Moss-Missic said.

She explained that the Insurance Commission assesses capital adequacy by comparing the capital an insurer has available with the amount of capital it is required to maintain. The regulator expects companies to maintain a prescribed capital ratio of 150 percent, providing a 50 percent buffer above the required capital level to account for unexpected events and potential weaknesses in the assessment model.

The Commission also has a minimum capital ratio of 120 percent, below which more serious forms of regulatory intervention may be considered.

Mrs Moss-Missick said falling below the 150 percent prescribed ratio will not automatically result in an insurer being shut down, but would trigger enhanced monitoring and potentially require the company to explain how it intends to restore its capital position.

The Commission's response could escalate depending on the level of risk, including penalties, sanctions, independent reviews and the appointment of external auditors.

Mrs Forbes-Fowler added that Bahamian insurers are also expected to establish their own internal capital ratios above the prescribed 150 percent level, taking account of their individual risk exposures and the additional financial cushion they consider necessary.

Companies that see themselves falling below their internal targets are encouraged to alert the Commission even where they remain above the prescribed ratio.

Beyond capital adequacy and financial reporting, the Insurance Commission is working to broaden its supervisory approach through additional actuarial guidance, stress testing and more comprehensive risk management requirements.

Mrs Moss-Missick said the actuarial team is developing guidelines for reviewing insurers' actuarial valuations, with the aim of providing clearer expectations to companies, while also working on stress-testing requirements to assess how insurers would perform under adverse financial and economic conditions.

The Insurance Commission also intends to develop guidance around Own Risk and Solvency Assessments (ORSA), which would encourage insurers to integrate risk monitoring into their strategic business decisions and ensure senior management and Boards regularly assess their risk appetite, exposures and mitigation strategies.

Recovery planning is another area on the regulator's horizon, with insurers expected to consider how they would respond to severe financial deterioration or a potential insolvency event.

Mrs Moss-Missick said the broader objective was to move beyond reviewing insurers' financial statements and establish a more comprehensive understanding of the risks facing individual companies. “The balance sheet is one part of it. Even when you think of finances, it's more than just that,” she said.