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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Sector Guides > IM Insurance Intermediaries and Managers
  • IM Insurance Intermediaries and Managers

    • IM-A Introduction

      • IM-A.1 Purpose

        • Executive Summary

          • IM-A.1.1

            This Module summarises the key aspects of requirements applicable to insurance intermediariesG and insurance managersG licensed in Bahrain, which are set out in full elsewhere in the different subject Modules of Volume 3 (Insurance). This Module is intended as an introductory guide to these Regulations and Directives, for potential license applicants, insurance brokersG , insurance consultantsG , insurance managersG and other interested parties. This Module only contains guidance material; in the event of discrepancy between this Module and the rules themselves, the latter will prevail.

            Amended: January 2007
            Amended: October 2007

          • IM-A.1.2

            For the purposes of this Module, the following terms will apply:

            Insurance Broker

            As per Paragraph AU-1.4.10, the broking of insurance contracts means:

            (a) Acting as an agent for another personG in relation to the buying of insurance for that other personG ;
            (b) Making arrangements with a view to another personG , whether as principal or agent, buying insurance; or
            (c) Advising on insurance.

            Insurance Consultant

            As per Paragraph AU-1.4.16, the offering of insurance advice (insurance consultant) means advising on insurance to third parties, without also acting as agent or making arrangements with a view to another personG buying insurance.

            Insurance Manager

            As per Paragraph AU-1.4.20, the provision of insurance management services means the provision of management services to, or the exercising of managerial functions on behalf of, an insurance firmG . An insurance managerG is appointed by an insurance firmG and is licensed in Bahrain to perform, under a contract of service, any managerial functions that are performed, or authority exercised, by a personG who is not a DirectorG nor an employeeG of the insurance firmG , acting on the express or implied authority of its Board and/or General ManagerG . 'Managerial functions' include, but are not limited to, the effecting of contracts of insuranceG and the issuing of instructions for the settlement of claims.

            Insurance Intermediary

            For purposes of this Module, the term insurance intermediaryG refers to insurance brokersG and insurance consultantsG .

            Amended: January 2007
            Amended: October 2007

        • Legal Basis

          • IM-A.1.3

            This Module contains the Central Bank of Bahrain's (CBB) Directive (as amended from time to time) relating to insurance intermediariesG and insurance managersG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to insurance licenseesG (including their approved personsG ).

            Amended: January 2011
            Amended: October 2007
            Adopted: January 2007

          • IM-A.1.4

            For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

            Adopted: January 2007

      • IM-A.2 Module History

        • IM-A.2.1

          This Sector Guide was first issued in April 2005 by the BMA together with the rest of Volume 3 (Insurance). Any material changes that have subsequently been made to this Module are annotated with the calendar date in which the change was made. Chapter UG-3 provides further details on Rulebook maintenance and version control.

          Amended: January 2007

        • IM-A.2.2

          When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 3 was updated in January 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

          Amended: January 2007

        • IM-A.2.3

          A list of recent changes made to this module are detailed in the table below:

          Module Ref. Change Date Description of Changes
          IM-1.2 01/07/05 Corrected that only insurance consultants and insurance managers are exempt from statutory deposits.
          IM-2.5 01/07/05 Corrected that insurance brokers are subject to statutory deposits.
          IM-3.4 01/07/05 Clarified scope of application of Decree Law No. 4.
          IM-2.1 01/10/05 Added the option for insurance manager to operate as a branch resident in Bahrain of a company incorporated in another jurisdiction.
          IM-3.4 01/10/05 Updated cross-references to Module FC.
          IM-A.1.3 01/2007 Updated to reflect new CBB Law and new Rule IM-A.1.3 introduced categorising this Module as a Directive.
          IM-2.3.3 10/2007 Amended the minimum number of Directors required to three as per amendment to Module HC.
          IM-2.1.7 and 2.1.8 04/2010 Amended legal status of insurance broker and insurance consultant to be in line with amendments made to Module AU.
          IM-A.1.3 01/2011 Clarified legal basis
          IM-1.2.1 and IM-2.3 04/2011 Amended to reflect changes to Module HC.
          IM-1.2.1 04/2012 Added summary of newly released Module CL (Client Money).
          IM-2.5.7 04/2012 Updated requirements for report on close links.
          IM-3.1.2 04/2012 Updated capital requirements for insurance brokers.
          IM-3.2.6 04/2012 Added requirement to have customer complaints handling procedures.
          IM-3.2A 04/2012 Added Section to deal with newly released Module CL (Client Money).
          IM-4.1 04/2012 Deleted reference to IMR and added new reference to Insurance broker return (Form IBR). Also added new requirement for agreed upon procedures related to compliance with Module CL.

        • IM-A.2.4

          Guidance on the implementation and transition to Volume 3 (Insurance) is given in Module ES (Executive Summary).

          Amended: January 2007

    • IM-1 Overview

      • IM-1.1 Insurance Intermediaries and Managers in Bahrain

        • IM-1.1.1

          The functions of insurance brokerG and insurance consultantG were in existence under the former Bahraini insurance law. The function of insurance managerG as a regulated activity has been introduced with Volume 3 of the Rulebook.

          Amended: October 2007

        • IM-1.1.2

          The CBB has introduced a regulatory regime aimed at captive insurersG Module CI. In most cases, captive insurersG sub-contract their day-to-day management to a professional management firm. The licensing of insurance managersG will simplify the licensing requirements of captive insurersG , as the parties with whom the captive insurerG may sub-contract its management will have been considered in detail by the CBB's licensing requirements.

          Amended: January 2007

        • IM-1.1.3

          In accordance with the CBB's definition, the activities of insurance managersG are not limited to acting on behalf of captive insurersG but may also relate to non-captive insurance firms, both conventional and takaful.

          Amended: January 2007

      • IM-1.2 Structure of this Guidance

        • IM-1.2.1

          The following table lists the Modules of the CBB Insurance Rulebook and indicates those that apply to insurance brokersG , insurance consultantsG and insurance managersG . The remaining chapters of this guide will describe in more detail the principal requirements of each Module of the Regulations and Directives that apply to insurance intermediariesG and insurance managersG .

          HIGH LEVEL STANDARDS

          Module AU (Authorisation) Regulations and Directives dealing with the licensing requirements and conditions for providers of regulated insurance servicesG . The Sections dealing with the authorisation requirements, licensing conditions, approved personsG conditions and information requirements and processes are applicable to insurance intermediariesG and insurance managersG .
          Module PB (Principles of Business) Principles that are applicable to all insurance licenseesG regulated in Bahrain; these apply in full to insurance intermediariesG and insurance managersG .
          Module HC (High-Level Controls) Directives in respect of governance, systems and controls of licensees. Different Rules and Guidance apply depending on the type of insurance intermediariesG and insurance managersG .
          Module AA (Auditors and Actuaries) Directives on the appointment and functions of external auditorsG and actuariesG of insurance licenseesG . Only those Directives dealing with auditorsG apply to insurance intermediariesG and insurance managersG .
          Module GR (General Requirements) Regulations and Directives dealing with requirements covering other areas not included in other Modules. These include: books and records, corporate and trade names, dividends, business transfers, controllersG , close linksG , statutory deposits, cessation of business and professional indemnity coverage. Statutory cash deposits are required for insurance brokersG .


          BUSINESS STANDARDS

          Module CA (Capital Adequacy) Directives governing minimum capital and solvency requirements and the valuation of assets and liabilities. Some of these Directives apply specifically to insurance intermediariesG and insurance managersG . Considering the nature of their business, the requirements for capital and solvency for insurance firmsG are far more detailed than for insurance intermediariesG and insurance managersG .
          Module BC (Business Conduct) The Code of Business Conduct governs the sale of insurance and applies to all insurance licenseesG .
          Module CL (Client Money) Directives applicable to insurance brokersG and appointed representativesG dealing with the holding of client moneyG .
          Module RM (Risk Management) Risk management standards applicable to licensees. Several of the requirements for risk management can be outsourced to insurance managersG .
          Module FC (Financial Crime) Directives governing the monitoring and reporting of financial crime, including the prevention of money laundering and terrorism financing and insurance fraud.
          Module TC (Training & Competency) Directives to be developed will apply to insurance intermediariesG and insurance managersG .


          REPORTING REQUIREMENTS

          Module BR (CBB Reporting) Requirements for reporting to the CBB. Annual reporting requirements apply to insurance intermediariesG and insurance managersG . Insurance intermediariesG and insurance managersG are exempted from group and quarterly reporting requirements.
          Module PD (Public Disclosure) Module PD does not apply to insurance brokersG , insurance consultantsG and insurance managersG .


          ENFORCEMENT AND REDRESS

          Module EN (Enforcement) This Module outlines enforcement powers and processes that may be applied by the CBB and applies in full to all insurance licenseesG .
          Module DP (Dispute Resolution) Directives will be developed later.
          Module CP (Compensation) Directives will be developed later.
          Amended: April 2012
          Amended: April 2011
          Amended: January 2007
          Amended: October 2007

    • IM-2 High Level Standards

      • IM-2.1 Authorisation

        • IM-2.1.1

          An entity in Bahrain must be authorised if it wishes to conduct regulated insurance servicesG , including effecting insurance contracts, the broking of insurance contracts, the offering of advice to third parties and the provision of insurance management services.

          Rulebook Reference AU-A.1.2
          Amended: October 2007

        • IM-2.1.2

          An insurance intermediaryG may be licensed for several types of business, including general insurance, unit linked long-term insurance, long-term insurance (other than unit-linked business), reinsurance and takaful products.

          Rulebook Reference AU-1.1.16,
          AU-1.1.18,
          AU-1.1.19 and
          AU-1.1.21
          Amended: July 2007
          Amended: October 2007

        • IM-2.1.3

          The broking of insurance contracts refers to advising on insurance, acting as agent for another person in relation to the buying of insurance for that other person or making arrangements with a view to another person, whether as principal or agent, buying insurance. A person does not carry on the broking of insurance contracts if he falls under the definition of exempt introducerG .

          Rulebook Reference AU-1.4.10 and
          AU-1.4.13
          Amended: October 2007

        • IM-2.1.4

          The offering of insurance advice by insurance consultantsG refers to providing advice to a person in his capacity as agent for a policyholderG or potential policyholderG , on the merits of entering into a contract of insuranceG as principal or agent.

          Rulebook Reference AU-1.4.16
          Amended: January 2007
          Amended: October 2007

        • IM-2.1.5

          The provision of insurance management services by insurance managersG refers to the provision of management services or exercising the managerial functions on behalf of an insurance firmG .

          Rulebook Reference AU-1.4.20
          Amended: October 2007

        • IM-2.1.6

          Licensees who were carrying out activities that fall within the definition of the regulated activity of insurance brokerG prior to 1 April 2005 may be unincorporated entities or natural persons and may continue as such until 31 December 2006.

          Rulebook Reference AU-2.1.7

        • IM-2.1.7

          New applicants for licensing as insurance brokersG , after 1 April 2005 must be:

          (i) A Bahraini joint stock company (BSC);
          (ii) A Bahraini company with limited liability ('WLL');
          (iii) A branch resident in Bahrain of a company incorporated under the laws of its territory of incorporation and (where local regulation so requires) authorised as an insurance or reinsurance intermediary in that territory, and licensed to conduct insurance business in Bahrain prior to 1st April 2009;
          (iv) A Bahraini exempt company (E.C.) which was incorporated and licensed to conduct insurance business prior to 1st January 2005; or
          (v) A Bahraini single person company which was incorporated and licensed to conduct insurance business prior to 1st April 2009..

          Rulebook Reference AU-2.1.8

          Amended: April 2010
          Amended: January 2007

        • IM-2.1.8

          For insurance consultantsG , the legal status must be:

          (i) A sole proprietorship registered with the Ministry of Commerce;
          (ii) A Bahraini single person company;
          (iii) A Bahraini joint stock company (BSC);
          (iv) A Bahraini company with limited liability ('WLL'); or
          (v) A Bahraini exempt company (E.C.) which was incorporated and licensed to conduct insurance business prior to 1st January 2005.

          Rulebook Reference AU-2.1.11

          Amended: April 2010
          Amended: January 2007

        • IM-2.1.9

          Insurance intermediariesG applying for a license must do so in the form prescribed by the CBB and such application must include inter alia, details of proposed professional indemnity coverage.

          Rulebook Reference AU-1.1.6
          Amended: January 2007

        • IM-2.1.10

          An insurance broker'sG business activity must be restricted by its Memorandum and Articles of Association to insurance broking.

          Rulebook Reference AU-2.1.10

        • IM-2.1.11

          For insurance managersG , the legal status must be:

          (i) A Bahraini joint stock company (BSC);
          (ii) A Bahraini company with limited liability ('WLL'); or
          (iii) A branch resident in Bahrain of a company incorporated under the laws of its territory of incorporation and (where local regulation so requires) authorised as an insurance or reinsurance intermediary in that territory.
          Rulebook Reference AU-2.1.12
          Amended: January 2007

        • IM-2.1.12

          insurance intermediariesG and insurance managersG with their Registered Office in the Kingdom of Bahrain must maintain their Head Office in the Kingdom. Overseas insurance licenseesG must maintain a local management presence and premises in the Kingdom appropriate to the nature and scale of their activities.

          Rulebook Reference AU-2.2.1

        • IM-2.1.13

          All persons wishing to undertake a controlled functionG in an insurance intermediaryG or insurance managerG must be approved by the CBB prior to their appointment. (Approved PersonG ).

          Rulebook Reference AU-1.2
          Amended: January 2007

        • IM-2.1.14

          Insurance intermediariesG and insurance managersG seeking an approved personG authorisation for an individual, must satisfy the CBB that the individual concerned is fit and proper to undertake the controlled functionG .

          Rulebook Reference AU-3
          Amended: January 2007

      • IM-2.2 Principles of Business

        • IM-2.2.1

          There are 10 Principles of Business that apply to all insurance licenseesG including insurance intermediariesG and insurance managersG .

          Amended: January 2007

        • IM-2.2.2

          Non compliance with the Principles of Business can lead to enforcement action, which can include the calling into question of whether the firm or its management continue to meet the fitness and propriety criteria for approval.

          Rulebook Reference PB-B.2.1

        • IM-2.2.3

          The Principles of Business are:

          1. Observing high standards of integrity and fair dealing. Insurance licenseesG and approved personsG should be honest and straightforward in their dealings with customersG , and disclose fully all relevant information to customersG , as required by the CBB's Regulations and Directives.
          2. Taking all reasonable steps to identify, and prevent or manage, conflicts of interest that could harm the interests of a customerG .
          3. Acting with due skill, care and diligence.
          4. Observing in full any obligations of confidentiality, including with respect to clientG information. This requirement does not over-ride lawful disclosures.
          5. Observing proper standards of market conduct, and avoiding action that would generally be viewed as improper.
          6. Taking reasonable care to safeguard the assets of customersG .
          7. Paying due regard to the legitimate interests of customersG and communicating with them in a fair and transparent manner and, when dealing with customersG who are entitled to rely on advice or discretionary decisions, taking reasonable care to ensure the suitability of such advice or decisions.
          8. Maintaining an open and co-operative relationship with the CBB and other competent regulatory bodies and taking reasonable care to ensure that activities comply with all applicable laws and Regulations.
          9. Maintaining adequate resources, whether human, financial or otherwise, sufficient to run the business in an orderly manner.
          10. Taking reasonable care to ensure that affairs are managed effectively and responsibly, with appropriate management, and systems and controls in relation to the size and complexity of operations.
          Rulebook Reference PB-1
          Amended: January 2007
          Amended: October 2007

      • IM-2.3 High Level Controls

        • IM-2.3.1

          In accordance with Principle of Business 10, insurance intermediariesG and insurance managersG must put in place effective management, systems and controls for their business. The High-Level Controls Module sets out the Directives that put this principle into practice.

          Rulebook Reference PB-1.10
          Amended: January 2007
          Amended: October 2007

        • IM-2.3.2

          Insurance brokersG and insurance consultantsG operating as a Bahraini single person company are exempt from the requirements of Module HC.

          Rulebook Reference HC-B.1.1
          Amended: April 2011

        • IM-2.3.3

          Some of these Rules govern the establishment, composition, functions and responsibilities of Boards of DirectorsG . Except for Bahraini single person companies, all incorporated insurance intermediariesG and insurance managersG must have a Board, composed of a minimum of three DirectorsG , which is ultimately accountable and responsible for the management and performance of the firm, in line with the Commercial Companies Law of 2001.

          Amended: April 2011
          Amended: January 2007
          Amended: October 2007

        • IM-2.3.4

          Responsibility for the day-to-day management of an insurance intermediaryG and insurance managerG is vested in the Chief Executive OfficerG , which is a controlled functionG . For insurance brokersG , they should consider having in place an audit committee, but are not required to have in place Nominating and Remuneration Committees. Insurance consultantsG and insurance managersG are not required to consider the need to operate Committees.

          Rulebook Reference AU-1.2.9, HC-B.1.2, HC-3.2 and HC-3.3
          Amended: April 2011
          Amended: January 2007
          Amended: October 2007

        • IM-2.3.5

          The CBB expects, for Bahraini insurance licenseesG , for Bahrain to be the principal place of business and for Bahrain to be the centre of its governance and management.

          Rulebook Reference HC-1.3.5
          AU-2.2.1 and
          GR-1
          Amended: January 2007

        • IM-2.3.6

          The CBB requires all insurance brokersG to establish an internal audit function to monitor the adequacy of their systems and controls.

          Rulebook Reference HC-6.5
          Amended: April 2011
          Amended: January 2007

        • IM-2.3.7

          Insurance intermediariesG and insurance managersG must nominate a Compliance Officer. In the case of insurance managersG , they must also be designated as the Compliance Officer for the managed firms.

          Rulebook Reference HC-3.4
          Amended: October 2007

        • IM-2.3.8

          Chapter HC-10 contains guidance applicable to insurance consultantsG and insurance managersG in respect of financial statement certification, appointment, training and evaluation of the Board, remuneration of approved personsG , management structure, corporate ethics, communication between the Board and shareholders and corporate governance disclosure.

          Rulebook Reference HC-10
          Amended: April 2011

      • IM-2.4 Auditors

        • IM-2.4.1

          Insurance intermediariesG and insurance managersG must have an annual external audit. Firms must obtain prior written approval from the CBB before appointing or re-appointing their auditorG .

          Rulebook Reference AA-1.1.1
          Amended: October 2007

        • IM-2.4.2

          There are specific Rules and Guidance governing the duties and restrictions of external auditorsG .

          Rulebook Reference AA-1
          Amended: January 2007
          Amended: October 2007

      • IM-2.5 General Requirements

        • IM-2.5.1

          Insurance intermediariesG and insurance managersG are expected to maintain books and records sufficient to produce financial statements and show a record of the business undertaken.

          Rulebook Reference GR-1.1

        • IM-2.5.2

          Where an insurance managerG maintains the books and records of a captive insurerG or another insurance firmG , these records must be sufficient to allow an audit or an on-site examination by the CBB of the captive insurerG or insurance firmG .

          Rulebook Reference GR-1.1.4
          Amended: January 2007

        • IM-2.5.3

          An insurance brokerG must maintain separate clientG accounts separate from those used for its own funds.

          Rulebook Reference GR-1.2.9 to GR-1.2.12
          Amended: April 2012
          October 2007

        • IM-2.5.4

          Insurance intermediariesG and insurance managersG require prior approval from the CBB for their corporate name and any trade names.

          Rulebook Reference GR-2.1
          Amended: January 2007

        • IM-2.5.5

          Bahraini insurance intermediariesG and Bahraini insurance managersG require CBB pre-approval for the distribution of dividends to shareholdersG .

          Rulebook Reference GR-3.1
          Amended: January 2007

        • IM-2.5.6

          All requirements dealing with controllersG apply in full to insurance intermediariesG and insurance managersG .

          Rulebook Reference GR-5

        • IM-2.5.7

          Requirements dealing with close linksG apply in full to insurance intermediariesG and insurance managersG . Annual reporting requirements of close links apply only to insurance firmsG and insurance brokersG .

          Rulebook Reference GR-6
          Amended: April 2012

        • IM-2.5.8

          Insurance brokersG are required to maintain a statutory cash deposit with a retail bank licensed to do business in Bahrain.

          Rulebook Reference GR-7.1.4
          Amended: January 2007
          Amended: October 2007

        • IM-2.5.9

          Insurance brokersG and insurance consultantsG must maintain professional indemnity coverage in line with the requirements outlined in Chapter GR-10.

          Rulebook Reference GR-10

    • IM-3 Business Standards

      • IM-3.1 Capital Adequacy

        • IM-3.1.1

          Principle 9 requires insurance licenseesG to hold adequate financial resources for the needs of the business. The Capital Adequacy Module sets out in detail the minimum financial resources requirements for insurance licenseesG . In addition, it is the responsibility of Boards of insurance licenseesG to make their own assessment of the financial resources needed to meet their liabilities.

          Rulebook Reference PB-1.9

        • IM-3.1.2

          Bahraini insurance brokersG must maintain in their insurance brokerage business at all times the greater of:

          (a) A minimum net assetsG value of BD 50,000;
          (b) 4% of fiduciary liabilities; or
          (c) 4% of annual income from global insurance broking activitiesG .

          There are no minimum capital and net asset requirements for overseas insurance brokersG . However, for overseas insurance brokersG , financial statements of the parent company must be submitted to the CBB for review, in order to assess the financial stability of the group on a global basis.

          Rulebook Reference CA-1.3
          Amended: April 2012
          Amended: October 2007
          Amended: January 2007

        • IM-3.1.3

          Insurance consultantsG and insurance managersG must possess financial resources commensurate with the scale and nature of their insurance consultancy or management activities. There are no minimum capital and net assets requirements applicable to insurance consultantsG and insurance managersG . However, Principle 9 does apply and the CBB may suspend or revoke the license of any insurance consultantG or insurance managerG whom it reasonably considers does not possess financial resources commensurate with the scale and nature of its insurance consultancy or management activities.

          Rulebook Reference CA-1.4
          Amended: January 2007

      • IM-3.2 Business Conduct

        • IM-3.2.1

          The Business Conduct Module comprises general rules (BC-1) and a Code of Practice (BC-2). These rules apply in full to insurance intermediariesG . However, it should be noted that Module BC is principles-based.

          Rulebook Reference BC-A.1
          Amended: January 2007

        • IM-3.2.2

          The CBB expects the insurance managerG to consider the requirements of the Code in relation to the service provided, on behalf of the captive or insurance firmG , to its 'clients', namely insured members of the group.

          Rulebook Reference BC-B.1.4
          Amended: January 2007

        • IM-3.2.3

          Other than a clientG who is an unincorporated entity with a turnover exceeding BD 1 million per year, an insurance intermediaryG must draw the client'sG attention to the status of the insurance firmG — whether or not the insurance firmG is locally licensed (as a Bahraini insurance firmG or overseas insurance firmG ) and, if not, the reasons for recommending or choosing that insurance firmG . In respect of these clientsG , this advice must be delivered in writing.

          Rulebook Reference BC-2.6.4
          Amended: January 2007

        • IM-3.2.4

          Insurance intermediariesG acting on behalf of customersG in arranging their insurance must, on request, disclose the amount of commission payable to them from the insurance premium, and any other remuneration received for arranging the insurance contract.

          Rulebook Reference BC-2.6.6
          Amended: January 2007

        • IM-3.2.5

          Licensees must avoid conflicts of interest, or if conflicts are unavoidable, must explain the position fully and manage the situation so as to avoid prejudice to any party.

          Rulebook Reference BC-2.13

        • IM-3.2.6

          Licensees must have appropriate customer complaints handling procedures and systems for effective handling of complaints.

          Rulebook Reference BC-4
          Added: April 2012

      • IM-3.2A Client Money

        • IM-3.2A.1

          The Client Money Module outlines the requirements that insurance brokersG have to meet with regards to holding client moneyG for which they are responsible.

          Rulebook Reference CL-A.1
          Added: April 2012

        • IM-3.2A.2

          Where an insurance brokerG receives payment from a client, it must maintain one or more premiums/contributions account and held client moneyG separate from its own money.

          Rulebook Reference CL-1.1.1
          Added: April 2012

        • IM-3.2A.3

          Insurance brokersG must ensure that they maintain proper records, sufficient to show and explain their transactions and commitments in respect of their client moneyG .

          Rulebook Reference CL-1.2.1
          Added: April 2012

        • IM-3.2A.4

          Unremitted insurance premiums held in the client money accountG and uncollected premiums from insureds must be recorded as fiduciary assetsG on the balance sheet of the insurance brokerG .

          Rulebook Reference CL-1.3.4

          Added: April 2012

        • IM-3.2A.5

          Insurance brokersG must pay to insurance firmsG premiums/contributions received no later than 15 calendar days from the date of the receipt of such amounts.

          Rulebook Reference CL-2.3.3

          Added: April 2012

        • IM-3.2A.6

          For brokerage activities, insurance brokersG are prohibited from collecting additional charges (other than the quoted premiums/contributions) from clients.

          Rulebook Reference CL-2.3.5

          Added: April 2012

        • IM-3.2A.7

          Brokerage charged by insurance brokersG cannot exceed 15% of the premiums/contributions quoted by insurance firmsG for motor and medical classes of business of direct general insurance business.

          Rulebook Reference CL-2.4.2

          Added: April 2012

      • IM-3.3 Risk Management

        • IM-3.3.1

          Principle 10 (IM-2.2.3) requires firms to have systems and controls that are adequate for their business. Consequently, the Risk Management Module of the CBB Rulebook contains Rules and Guidance on how, specifically, insurance licenseesG should monitor and manage risk. This Module applies in full to insurance brokersG , except for the Sections dealing with market risk (RM-4.1) and insurance technical risk (RM-5.1). This Module does not apply to insurance consultantsG and insurance managersG .

          Rulebook Reference PB-1.10 and
          RM-B.1.1
          RM-B.1.6
          Amended: January 2007
          Amended: October 2007

        • IM-3.3.2

          The Module contains both:

          •  General requirements (on the overall management of risk); and
          •  Specific requirements on the management of specific risk classes.
          Rulebook Reference RM-1
          RM-2 to RM-8
          Amended: January 2007

        • IM-3.3.3

          While the business of insurance managersG is not subject to this Module, clients of insurance managersG that are insurance firmsG , such as captive insurersG , are subject to the requirements of this Module. The insurance managerG , in fulfilling its obligations to its clients, therefore needs to manage the affairs of its clients in accordance with the requirements of the Rulebook, including this Module.

          Rulebook Reference RM-B.1.7
          Amended: January 2007

      • IM-3.4 Financial Crime

        • IM-3.4.1

          The general law of Bahrain imposes obligations on individuals and firms in relation to the prevention and prohibition of the laundering of money. All insurance licenseesG are subject to the statutory requirements of this Law.

          Rulebook Reference Decree Law No.4

        • IM-3.4.2

          Chapters FC-1 to FC-9 applies to insurance firmsG and insurance brokersG . Where captive insurersG are managed by an insurance managerG , these Chapters are also to be applied to the insurance managerG . This Module must be applied when dealing with new clientsG and when renewing policies or other insurance arrangements.

          Rulebook Reference FC-B.1.1
          Amended: January 2007

        • IM-3.4.3

          Chapter FC-10 dealing with insurance fraud, applied to all insurance licenseesG .

          Rulebook Reference FC-B.1.4

        • IM-3.4.4

          Chapter FC-1 outlines the requirements for customer due diligence. In the case of captive insurance firmsG it is expected that this identity will be apparent both from the ownership of the captive and the origin of insurance premiums from traceable bank accounts. In this case, no further verification will be needed as a matter of routine, although this does not exempt firms and individuals from reporting any transaction that they consider suspicious in nature.

          Rulebook Reference FC-1
          Amended: January 2007

        • IM-3.4.5

          The reporting of suspicious transactions is the responsibility of the firm's Money Laundering Reporting Officer ('MLRO'). Captive insurance firmsG that are managed by an insurance managerG are specifically exempted from appointing a MLRO, as the insurance managerG must appoint one to perform these responsibilities for all firms under its management.

          Rulebook Reference FC-3.1.1 and
          FC-3.1.2
          Amended: January 2007
          Amended: October 2007

        • IM-3.4.6

          The MLRO will prepare an annual report on compliance with the anti-money laundering and combating terrorism financing controls and procedures. The Boards of captive firms will need to include the consideration of this report as a standing item for Board meetings each year.

          Rulebook Reference FC-3.3

        • IM-3.4.7

          Appendix FC-(iv), contained in Part B of the CBB Rulebook, provides guidance material and examples of transactions that would be considered suspicious for the purposes of this Directive.

          Rulebook Reference Appendix FC-(iv)
          Amended: January 2007

    • IM-4 Reporting Requirements

      • IM-4.1 CBB Reporting

        • IM-4.1.1

          Insurance consultantsG and insurance managersG must submit to the CBB the audited financial statements for each financial year. They are exempted from quarterly reporting and from group financial reporting to the CBB.

          Rulebook Reference BR-1.2
          Amended: April 2012
          Amended: January 2007

        • IM-4.1.1A

          Insurance brokersG must prepare and submit to the CBB an Insurance Broker Return (Form IBR) for each financial year, within 2 months of the insurance broker'sG financial year end.

          Rulebook Reference BR-1.2A
          Added: April 2012

        • IM-4.1.2

          Details of the content of the Insurance Broker Return (Form IBR) can be found in BR-1.2A.6. The Return must be:

          (a) Deposited with the CBB within 3 months of the year end;
          (b) Reviewed by the external auditorG based on agreed-upon procedures; and
          (c) Be accompanied by a Directors'G Certificate.

          Rulebook Reference BR-1.2A.6
          BR-1.2A.1
          BR-1.2A.14
          BR-1.2A.11
          Amended: April 2012
          Amended: October 2007
          Amended: January 2007

        • IM-4.1.2A

          Insurance brokersG must submit to the CBB within 3 months from the financial year-end, a report as to the quality of the insurance broker'sG procedures dealing with the insurance broker'sG fiduciary assets/liabilities and compliance with Module CL (Client Assets)

          Rulebook Reference BR-1.5.4
          Added: April 2012

        • IM-4.1.3

          Insurance intermediariesG and insurance managersG must disclose to the CBB material information about changes in their situation including (but not limited to):

          (a) Significant breaches in Rules and other requirements;
          (b) Civil, criminal, and disciplinary procedures, fraud, errors and other irregularities;
          (c) Financial difficulties, breach of minimum solvency requirements, insolvency, bankruptcy, winding-up;
          (d) Changes in auditorsG and actuariesG ;
          (e) Changes in address, legal status etc.; and
          (f) Changes in controllersG and close linksG .
          Rulebook Reference BR-2.2.4
          BR-2.2.6 to BR-2.2.8
          BR-2.2.11
          BR-2.3.29
          BR-2.3.3
          BR-2.3.7
          Amended: January 2007
          Amended: October 2007

        • IM-4.1.4

          Insurance intermediariesG and insurance managersG are required to maintain an open relationship with the supervisor and must permit representatives of the CBB, or persons appointed for the purpose by the CBB to have access, with or without notice, during reasonable business hours to any of their business premises in relation to the discharge of the CBB's functions under the relevant law. The CBB does have powers to request information and commission a report on the firm's business.

          Rulebook Reference BR-3.1
          BR-3.2
          Amended: January 2007

      • IM-4.2 Public Disclosure

        • IM-4.2.1

          The Public Disclosure Module of the CBB Rulebook does not apply to insurance brokersG , insurance consultantsG and insurance managersG .

          Rulebook Reference PD-B.1.4
          Amended: January 2007

    • IM-5 Enforcement and Redress

      • IM-5.1 Enforcement

        • IM-5.1.1

          The Enforcement Module of the CBB Rulebook applies in full to all insurance licenseesG .

          Rulebook Reference Module EN
          Amended: January 2007

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