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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Enforcement & Redress > EN Enforcement > EN-2 Investigations
  • EN-2 Investigations

    • EN-2.1 Legal Source

      • EN-2.1.1

        Articles 121 to 123 of the CBB Law empower the CBB to order investigations of licensees, in order to help it assess a licensee's compliance with the provisions of the CBB Law. Such investigations may be carried out by its own officials or appointed expertsG . Articles 111 and 124 require licenseesG to make available to the CBB's inspectors their books and records, and to provide all relevant information within the time limits deemed reasonable by the inspectors.

        Amended: October 2011
        Adopted: January 2007

      • EN-2.1.2

        Articles 163 and 170 of the CBB Law provide for criminal sanctions where false or misleading statements are made to the CBB, or an investigation by the CBB is otherwise obstructed (see Section EN-10.3).

        Adopted: January 2007

    • EN-2.2 CBB Policy

      • EN-2.2.1

        The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission special investigations of insurance licenseesG in order to help it assess their compliance with CBB requirements, as contained in Article 121 of the CBB Law. Such investigations may be carried out either by the CBB's own officials, by duly qualified experts appointed for the purpose by the CBB ('Appointed ExpertsG '), or a combination of the two.

        Amended: January 2007

      • EN-2.2.2

        Failure by insurance licenseesG to cooperate fully with the CBB's inspectors, or its Appointed ExpertsG , will be treated as demonstrating a material lack of cooperation with the CBB which will result in other enforcement measures being considered, as described elsewhere in this Module. This guidance is supported by Article 114(a) of the CBB Law.

        Amended: January 2007

      • EN-2.2.3

        The CBB may appoint an individual or a firm as an Appointed ExpertG . Examples of Appointed ExpertsG are reporting accountants, expert witnesses and independent actuaries. The appointment of Appointed ExpertsG is not necessarily indicative of a contravention of CBB requirements or suspicion of such a contravention. For instance, an Appointed ExpertG may typically be commissioned to provide an expert opinion on a technical matter.

        Amended: January 2007

      • EN-2.2.4

        Appointed ExpertsG report in a form and within a scope defined by the CBB, and are solely responsible to the CBB for the work they undertake in relation to the investigation concerned. The report produced by the Appointed ExpertsG is the property of the CBB (but is usually shared by the CBB with the firm concerned). The cost of the Appointed Experts'G work must be borne by the licensee concerned.

        Amended: January 2007

      • EN-2.2.5

        In selecting an Appointed ExpertG , the CBB will take into account the level of fees proposed and aim to limit these to the lowest level consistent with an adequate review of the matters at hand, given the qualifications, track record and independence of the persons concerned. Because the costs of such investigations are met by the licensee, the CBB makes only selective use of Appointed ExpertsG , when essential to supplement CBB's other supervisory tools and resources.

        Amended: January 2007

      • EN-2.2.6

        [This paragraph was deleted in October 2011]

        Deleted: October 2011

      • EN-2.2.7

        [This paragraph was deleted in October 2011]

        Deleted: October 2011

      • EN-2.2.8

        [This paragraph was deleted in October 2011]

        Deleted: October 2011

      • EN-2.2.6

        The CBB may commission reports, which require Appointed ExpertsG to review information from another company within the reporting insurance licensee'sG group even when that other entity is not subject to any CBB requirements.

        Amended: October 2011
        Adopted: January 2007

      • EN-2.2.7

        In accordance with Articles 114 and 123 of the CBB Law, insurance licenseesG must provide all relevant information and assistance to Appointed ExpertsG on demand.

        Amended: October 2011
        Adopted: January 2007

      • EN-2.2.11

        [This Paragraph was moved to Section BR-3.5]

        Deleted: October 2011
        Adopted: January 2007

    • EN-2.3 Procedure

      [The content of this Section was moved to Section BR-3.5 in October 2011]

      • EN-2.3.1

        All proposals for investigatorsG require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the investigatorsG concerned. A separate letter is sent to the licensee, notifying them of the appointment. At the CBB's discretion, a trilateral meeting may be held at any point, involving the CBB and representatives of the licensee and the investigatorsG , to discuss any aspect of the investigation.

        Amended: October 2009
        Amended: January 2007

      • EN-2.3.2

        Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the insurance licenseeG concerned.

        Amended: January 2007

    • EN-2.4 The Required Report

      [The content of this Section was moved to Section BR-3.5 in October 2011]

      • EN-2.4.1

        The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned investigators will normally be required to report on one or more of the following aspects of an insurance licensee'sG business:

        a) Accounting and other records;
        b) Actuarial estimates;
        c) Internal control systems;
        d) Returns of information provided to the CBB;
        e) Operations of certain departments; and/or
        f) Other matters specified by the CBB.
        Adopted: October 2009

      • EN-2.4.2

        InvestigatorsG will be required to form an opinion on whether, during the period examined, the insurance licenseeG is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

        Adopted: October 2009

      • EN-2.4.3

        The investigators'G report should follow the format set out in Appendix EN-1 in Part B of Rulebook Volume 3 (Insurance).

        Adopted: October 2009

      • EN-2.4.4

        Unless otherwise directed by the CBB, the investigatorsG should discuss the report with the Board of Directors and/or senior management in advance of it being sent to the CBB.

        Adopted: October 2009

      • EN-2.4.5

        Where the report is qualified by exceptionG , the report must clearly set out the risks which the insurance licenseeG runs by not correcting the weakness, with an indication of the severity of the weakness, should it not be corrected. InvestigatorsG will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

        Adopted: October 2009

      • EN-2.4.6

        If the investigatorsG conclude, after discussing the matter with the insurance licenseeG , that they will give a negative opinion (as opposed to one qualified by exceptionG ) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

        Adopted: October 2009

      • EN-2.4.7

        The report must be completed, dated and submitted, together with any comments by Directors or management (including any proposed timeframe within which the insurance licenseeG has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

        Adopted: October 2009

    • EN-2.5 Other Notifications to the CBB

      [The content of this Section was moved to Section BR-3.5 in October 2011]

      • EN-2.5.1

        InvestigatorsG must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing an insurance licenseeG (see Module AU), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned insurance licenseeG , or that the interests of policyholdersG are at risk because of adverse changes in the financial position or in the management or other resources of an insurance licenseeG . Notwithstanding the above, it is primarily the insurance licensee'sG responsibility to report such matters to the CBB.

        Adopted: October 2009

      • EN-2.5.2

        The CBB recognises that investigatorsG cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when investigatorsG , in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

        Adopted: October 2009

      • EN-2.5.3

        If investigatorsG decide to communicate directly with the CBB in the circumstances set out in Paragraph EN-2.5.1 above, they may wish to consider whether the matter should be reported at an appropriate senior level in the insurance licenseeG at the same time and whether an appropriate senior representative of the insurance licenseeG should be invited to attend the meeting with the CBB.

        Adopted: October 2009

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