Cap. 403 Art. 31BSupervisory review process.

(1) The competent authority shall review and evaluate the strategies, processes and reporting procedures which are established by authorised undertakings to comply with this Act, regulations made and Insurance Rules issued thereunder. This review and evaluation shall comprise the assessment of the qualitative requirements relating to the system of governance, the assessment of the risks which the undertakings concerned face or may face and the assessment of the ability of those undertakings to assess those risks taking into account the environment in which the undertakings are operating.

(2) The competent authority shall in particular review and evaluate compliance with the following:

(a) the system of governance, including the own-risk and solvency assessment, as set out in article 18I;

(b) the technical provisions as provided for in article 18E;

(c) the capital requirements as provided for in articles 15 and 17;

(d) the investment rules as set out in Insurance Rules issued in terms of this Act;

(e) the quality and quantity of own funds as determined by Insurance Rules issued pursuant to article 14; and

(f) where the authorised insurance or reinsurance undertaking uses a full or partial internal model, on-going compliance with the requirements for full and partial internal models set out in Insurance Rules issued pursuant to article 15.

(3) The competent authority shall assess the adequacy of the methods and practices of the authorised insurance or reinsurance undertakings designed to identify possible events or future changes in economic conditions that could have adverse effects on the overall financial standing of the undertaking concerned.

(4) The competent authority shall assess the ability of the authorised undertakings to withstand those possible events or future changes in economic conditions.

(5) Where the competent authority identifies any weakness or deficiency as a consequence of the supervisory review process, it shall request the insurance or reinsurance undertaking concerned to remedy such weakness or deficiency within such period and in such manner as it may deem necessary or appropriate in the circumstances.

(6) The reviews, evaluations and assessments referred to sub-articles (1) to (4), shall be conducted regularly and the competent authority shall establish the minimum frequency and the scope of those reviews, evaluations and assessments having regard to the nature, scale and complexity of the activities of the insurance or reinsurance undertaking concerned.

(7) In the case of events or future changes in economic conditions that could have unfavourable effects on the overall financial standing of authorised insurance or reinsurance undertakings, in addition to the calculation of the Solvency Capital Requirement, the competent authority may require undertakings to carry out such tests as may be determined to assess the ability of the undertakings concerned to withstand such events or future changes in economic conditions that could have unfavourable effects on their overall financial stability.