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Text of the page (random words):
surance scheme that provides prompt access to funds aids in enhancing public confidence in bermuda s financial system enhance bermuda s attractiveness as a world class financial jurisdiction in a world that looks to regulation and insurance as a way of gauging the stability and security of the financial environment in any given country the scheme enhances bermuda s attractiveness and reputation as a well regulated financial jurisdiction in the absence of a lender of last resort the oversight provided by the bermuda monetary authority which oversees the operation of a mature and highly regarded regulatory system over the island s financial institutions and the protection offered by the scheme are seen as vital to creating an enhanced financial safety net in bermuda deposit insurance act 2011 deposit insurance rules 2016 why do we need deposit insurance the global financial crisis of 2008 caused regulators around the world to re evaluate existing regulatory and institutional frameworks the incidence of significant losses on the part of financial institutions globally led to heightened interest on the part of the general public policy makers and regulators in the key aspects of the financial safety net in short the scheme has a narrow mandate separate from but in addition to the supervisory role of the bermuda monetary authority participation in the scheme is mandatory for all scheme members scheme members are defined in the act as any bank or credit union that is licensed by the authority a list of scheme members can be found anythingpopup id 3 the coverage amount of the scheme has been set up to a maximum of 25 000 per insured depositor per scheme member the scheme covers bermuda dollar deposits held by insured depositors at scheme members insured depositors include individual and joint account holders individuals that hold accounts in the name of sole proprietorships partnerships and or unincorporated associations as well as charities registered under the charities act 1978 and companies registered in the register of small businesses maintained by the bermuda economic development corporation bedc the scheme is funded by premiums paid to the bdic by scheme members the scheme is a domestic insurance scheme it does not cover deposits held in overseas subsidiaries or branches of scheme members neither does it cover foreign currency deposits in accounts with scheme members for depositors costs of deposit insurance deposit insurance is not without cost in the first instance there is the collection of premiums for funding the scheme and to enable the payment of compensation up to a maximum of 25 000 per insured depositor with a coverage level of 25 000 and at current premium rates the direct cost is likely to be in the order of 6 million to 7 million a year in addition to the direct funding costs there will be the costs of administering the scheme itself which the bdic intends to keep as low as possible there will also be certain indirect costs associated with the introduction of the scheme such as the bermuda government providing liquidity support to the scheme while the deposit insurance fund the fund is being built up membership and coverage compulsory participation of all qualifying financial institutions in a deposit insurance scheme is the practice usually adopted internationally this is to promote comprehensive protection to deposits and to avoid adverse selection which might give rise to instability in the financial system accordingly it has been legislated that participation in the scheme is mandatory for all banks and credit unions as outlined in section 11 of the act scheme members are defined in the act as any bank or credit union that is licensed by the authority it has been established that those persons protected by the scheme comprise the following individuals individuals in respect of joint accounts individuals who place a deposit in an account with a scheme member in the name of a sole proprietorships partnerships unincorporated association charities registered under the charities act 1978 companies registered in the register of small businesses maintained by the bedc it has further been established that the following bermuda dollar deposits are eligible for protection under the scheme a deposit in a savings account a deposit in a fixed deposit account a deposit in a current chequing account a deposit in a credit union member s share account about us the bdic is an independent statutory corporation headed by a board of directors the board of directors consists of a chairman the chief executive officer the chief executive officer of the authority the officer of the bermuda monetary authority responsible for the supervision of scheme members the financial secretary and not less than two and not more than four other directors the minister of finance appoints the chairman and other directors of the bdic from amongst persons with proven experience in banking or financial services functions of the bdic in the management of the scheme the bdic exercises the following principal functions collects premiums from scheme members assesses claims made against the scheme and determines the eligibility and entitlement of claimants makes compensation payments to insured depositors as determined under the act recovers any amount paid out to a failed scheme member s insured depositors from the assets of the failed scheme member and educates the public on matters relating to the scheme deposit insurance premiums premiums collected by the bdic from scheme members will only be used for payment of compensation to insured depositors payment of principal and interest on any borrowings by the bdic purchase of permitted investments by the bdic and payment of administrative costs of the bdic premiums collected by the bdic are held in a fiduciary capacity for the insured depositors in case of the failure of a scheme member to reflect this trust the investment guidelines emphasise safety and liquidity over return deposit insurance funding in order for a deposit insurance scheme to be well structured and effective it must have ready access to adequate funds to ensure prompt payment of compensation to insured depositors a number of options are available for collecting premiums to be put into a deposit insurance fund contributions may be levied up front to build up a deposit insurance fund pre funded or after a member failure post funded or a combination of both post funding provides finance to a deposit insurance fund after a member fails while this method requires less administrative maintenance and funding costs funding requirements may impose a financial burden on the system as the need to pay assessments or levies to deal with failures occurs at an inopportune time thus most countries favour some form of pre funded scheme pre funding uses periodic contributions by member institutions to build up resources for the payment of compensation to insured depositors in the case of a scheme member failure this ensures that a liquid pool will be readily available to make quick payments to insured depositors reduces the need for cross subsidisation i e financial burden being absorbed by surviving members and helps reinforce public confidence in such schemes bermuda s deposit insurance scheme is pre funded by premiums paid to the bdic by scheme members these are paid on a quarterly basis and are calculated on a percentage rate basis with reference to the amount of insured deposits held by an individual scheme member the percentage rate chargeable is currently set at 0 25 per annum of the scheme member s insured deposits these premiums are accumulated in the fund board of directors the bdic is governed by a board of directors the board of directors is responsible for the proper administration and management of the scheme and the fund in order for the bdic to discharge its functions effectively the board of directors has the necessary powers to finance compensation payments borrow where necessary to ensure prompt reimbursement to insured depositors enter into contracts invest the scheme premiums in the manner specified in the act set internal operating budgets and procedures obtain information from scheme members and appoint agents or authorise third parties to perform any of the functions of the board of directors under the act the current members of the bdic board of directors are stephen todd jp chairman ceo the bermuda hotel association hotel employers of bermuda alan richardson cpa ca ceo bermuda deposit insurance corporation the hon maxwell burgess jp retired mark crockwell cfa treasurer said holdings ltd ashley kibblewhite director banking trust corporate services investment bermuda monetary authority nathan kowalski cpa ca cfa cim cfo anchor investment management ltd chid ofoego financial secretary government of bermuda tammy richardson augustus partner appleby craig swan ceo and executive director bermuda monetary authority bdic and the bermuda monetary authority the authority is responsible for the supervision of scheme members and the overall stability of the bermuda banking system the sole function of the bdic is to protect insured deposits if a scheme member fails the roles of the authority and the bdic complement each other in achieving the common objectives of protecting deposits and promoting stability in the financial system although the bdic is independent of the authority an officer of the authority responsible for the supervision of scheme members is also a member of the board of the bdic public access to information pati the bdic as a statutory corporation is required under the public access to information act 2010 pati act to publish an information statement which is intended to help the public access information and records that we hold the pati act creates a new and welcomed culture of openness for public authorities within our country it introduces the idea that records held by public authorities are a national resource for all of us and the bdic wholeheartedly endorses this shift and we are committed to openness good governance and transparency view the pati statement in full here faqs if you require further information or clarification on any of these or other questions please contact the bdic office why is deposit insurance necessary in bermuda following the global financial crisis of 2008 bermuda s regulatory sector began to think more critically about the key aspects of bermuda s financial safety net unlike many other jurisdictions that have in place consumer protections against financial institutions failing bermuda has historically relied almost exclusively on the bermuda monetary authority to regulate and supervise local financial institutions to ensure that they conduct their business in a prudent manner by establishing a deposit insurance scheme bermuda s financial safety net is further strengthened against the serious economic consequences that might follow from the failure of one of bermuda s scheme members what does deposit insurance provide deposit insurance provides insured depositors with deposits in a scheme member some protection against losing all of their money deposited with that scheme member should it fail the protection provided by the scheme is limited to bermuda dollar deposits and provides compensation up to a maximum of 25 000 in total for each insured depositor within a scheme member how was the deposit insurance scheme established the scheme was established by the creation of the act and its operation is governed by the rules the act established the bdic as a statutory corporation managed independently by a board of directors the bdic is responsible for among other things collecting premiums and other relevant depositor data from scheme members and paying compensation to insured depositors in the event of a scheme member s failure which financial institutions are participating in the deposit insurance scheme currently only bermuda s four banks are scheme members who participate in the scheme a list of scheme members may be found anythingpopup id 4 how is the deposit insurance scheme funded the scheme is funded by premiums paid to the bdic by scheme members these are paid on a quarterly basis and are calculated on a percentage rate basis with reference to the amount of insured deposits held by an individual scheme member the percentage rate chargeable is currently set at 0 25 per annum of the scheme member s qualifying insured deposits these premiums are accumulated in the fund how is the deposit insurance fund managed and where are the funds held the scheme is managed by the board of directors of the bdic premiums paid into the fund are held with highly rated financial institutions outside of bermuda and are managed by the bdic investment committee the bdic investment committee may employ the services of fund managers to ensure the fund s growth and liquidity while adhering to mandated risk parameters who is an insured depositor insured depositors are persons that hold bermuda dollar deposits that fit within one of the following categories of insured depositors as defined in the act individuals individuals in respect of joint accounts individuals who place a deposit in an account with a scheme member in the name of a sole proprietorships partnerships unincorporated association charities registered under the charities act 1978 companies registered in the register of small businesses maintained by the bedc what is an insured deposit the following bermuda dollar deposits held by insured depositors are eligible for protection under the scheme a deposit in a savings account a deposit in a fixed deposit account a deposit in a current chequing account a deposit in a credit union member s share account bermuda dollar deposits that are pledged charged or secured as collateral toward a borrowing are not protected under the scheme is the deposit insurance fund sufficient to cover a scheme member s failure and if not when will it be sufficient the payments of premiums by scheme members into the fund commenced with effect from 1 july 2016 currently the fund is not adequate to cover the potential financial obligations of the bdic under the scheme should a scheme member fail as the collection of premiums will take some time to accumulate it is anticipated that this could take between 15 20 years for the fund to be of a sufficient size for this purpose the ultimate determination of the size of the fund necessary will have to be undertaken by carrying out an actuarial evaluation once sufficient data has been received from scheme members what is the amount of insurance coverage and how does it apply the maximum total compensation payable to an insured depositor should a scheme member fail is up to a maximum of 25 000 regardless of how many accounts the depositor holds with that scheme member for example mr smith has three bermuda dollar accounts with a scheme member each having a balance of 10 000 one acc...