Most of the fit and proper requirements suggested in the draft Board Notice published by the FSB are rational and in line with the broad discretion permitted by the Insurance Acts.

In every case the registrar must take into account the seriousness of the circumstances, the relevance of the failure to meet the criteria and the time since the failure occurred. The failure to meet the integrity requirements will therefore have to be material and the registrar’s decision will always be subject to review by a court which requires a rational decision on the basis of the information available.

But some requirements are too broad. For instance, where it refers to not accepting civil liability “for fraud or misrepresentation under any law” it should refer to fraudulent misrepresentation.

The requirement that a significant owner of an insurer must have adequate unencumbered financing or funding and future access to capital to fund the insurer’s financial soundness means that the significant owner is effectively guarantor for the obligations of the insurer. Irrespective of the business plan put up by the insurer, strict solvency requirements and the monitoring of insurers by annual reporting and many other methods, the significant owner will need to demonstrate it can bail out the insurer under circumstances where the insurer would otherwise fail. This is not a reasonable requirement for a company with capital and a viable business plan and goes beyond the scope of delegated powers.

Insurers have until 1 July 2015 to submit comments on the proposed amendments (see Board Notice 113 of 2015 and Gazette No 38832 dated 29 May 2015).