Custodian Life: Insurance Appeal Tribunal Inaction Raises Serious Rule-of-Law Concerns in Bermuda
In any well-regulated financial jurisdiction, regulatory bodies and legal processes are the bedrock of confidence. They exist to provide fairness, clarity, and timely resolution, serving as the guardrails that ensure accountability is upheld.
The case of Custodian Life in Bermuda, however, presents a startling counter-example—one that reveals how the machinery of regulatory oversight can grind to a halt, subverting the very principles of due process it was built to protect. This is not a story of a complex legal battle, but one of profound institutional inaction and procedural collapse.
The first and most glaring failure is a simple matter of the calendar. After receiving a Decision Notice from the Bermuda Monetary Authority (BMA), Custodian Life filed its official appeal in June and July of 2022. This was no frivolous challenge; the appeal provided extensive professional material, including actuarial analysis from Milliman and audit-related input involving KPMG Bermuda, which raised substantive challenges to the BMA’s assumptions.
Under the Insurance Appeal Tribunal Regulations 2011, the law is unambiguous. The BMA had a statutory deadline of 28 days to file its response. This strict timeline is designed to prevent regulators from using indefinite delays as a de facto punitive measure and to ensure swift access to justice. That legal deadline expired in August 2022.
However, the BMA did not file its response until in or around May 2023—almost a full year after its legal obligation had lapsed. A delay of this magnitude is not a minor procedural slip; it is a fundamental breakdown that undermines the entire purpose of a timely appeal process and served as the first domino in a systemic collapse.
The BMA’s failure to act did not occur in a vacuum. It was compounded by the profound silence of the very body charged with oversight: the Insurance Appeal Tribunal. The Tribunal is responsible for administering the appeal and, crucially, for enforcing its own rules.
Yet, as the BMA’s period of non-compliance stretched from weeks into months, the Tribunal took no procedural steps. No preliminary hearing was convened, and it failed to enforce the statutory timetable set out in its own governing regulations. The practical outcome was that the entire appeal process was effectively paralysed.
This inaction is critically significant. The Tribunal had a duty to enforce its own regulations; its failure to do so rendered the BMA’s non-compliance effectively consequence-free. An appeal process is meaningless if the adjudicating body does not actively manage it, leaving the appellant trapped in a state of “regulatory limbo,” unable to have its case heard.
The paralysis of the appeal process becomes even more suspect when contrasted with the BMA’s own internal records. Contemporaneous communications from within the BMA acknowledged that Custodian Life was not insolvent and, in fact, exhibited indicators of financial viability.
This internal assessment stands in stark opposition to the regulator’s external posture of aggressive regulatory action and its simultaneous failure to engage with the insurer’s appeal. While the BMA’s Decision Notice expressed concerns, its own documents suggested the situation was not one of imminent collapse.
This rightly calls into question the motive and justification for the BMA’s actions. If the regulator’s own records did not indicate insolvency, what was the basis for both paralyzing the appeal for nearly a year and later seeking the company’s liquidation? The disconnect between internal assessment and external action demands scrutiny.
Instead of rectifying the stalled appeal, the BMA escalated its actions dramatically. In November 2023, the regulator petitioned the court to place Custodian Life into Joint Provisional Liquidation—the corporate equivalent of a death sentence.
This punitive action occurred while the insurer’s legitimate appeal had remained unresolved for approximately sixteen months. By petitioning for liquidation, the BMA effectively sidestepped the legal challenge it had failed to address. It moved for the most severe regulatory outcome possible while the insurer’s formal appeal against the initial decision was still waiting to be heard by the paralyzed Tribunal. This escalation represented a circumvention of due process, leveraging a new action to bypass an unresolved old one.
This cascade of failures extends far beyond a single corporate case. Inquiries from concerned policyholders and stakeholders to the Chairman and members of the Insurance Appeal Tribunal—reportedly copied to the Ministry of Finance—have gone unanswered, amplifying the crisis of confidence and suggesting unresponsiveness at multiple levels of authority.