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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > BC Business and Market Conduct > BC-2 The Insurance Code of Practice
  • BC-2 The Insurance Code of Practice

    • BC-2.1 Overarching Principles

      • BC-2.1.1

        In the course of direct insuranceG activities, licensees must:

        (a) Act with due skill, care and diligence in all dealings with customersG ;
        (b) Act fairly and reasonably in all dealings with customersG ;
        (c) Identify customers'G specific requirements in relation to the products and services about which they are enquiring;
        (d) Ensure that any advice to customersG is aimed at the customers'G interests and based on adequate standards of research and analysis;
        (e) Provide sufficient information to enable customersG to make informed decisions when purchasing insurance products and services offered to them;
        (f) Provide sufficient and timely documentation to customersG to confirm that their insurance arrangements are in place and provide all necessary information about their products, rights and responsibilities;
        (g) Maintain fair treatment of customersG through the lifetime of their insurance products and customerG relationships, and ensure that customersG are kept informed of important events;
        (h) Handle claims fairly and promptly;
        (i) Ensure that all information provided to customersG is clear, fair and not misleading, and appropriate to customers'G information needs; and
        (j) Take appropriate measures to safeguard any money and property handled on behalf of customersG and maintain confidentiality of customerG information.
        Amended: January 2007
        Amended: October 2007

    • BC-2.2 Marketing and Promotion

      • BC-2.2.1

        Licensees must ensure that all advertising and promotional material is clear, fair and not misleading.

    • BC-2.3 Initial Customer Information about Service

      • BC-2.3.1

        At the initial point of contact, before any contract is concluded between the customerG and the insurance licenseeG , licensees must advise customersG of the nature of the service they can offer and their relationship with the customerG , including:

        (a) The types of services that can be provided;
        (b) The choice of products and services that can be offered; and
        (c) Whether the licensee acts on behalf of an insurer or insurers, or acts independently on behalf of the customerG in arranging insurance.
        Amended: January 2007

    • BC-2.4 Identification of Customer Requirements

      • BC-2.4.1

        Licensees must identify customers'G requirements by seeking from customersG such information about their circumstances and objectives as might reasonably be expected to be relevant in establishing their specific insurance needs in relation to the products and services about which they are enquiring.

    • BC-2.5 Advice and Recommendations

      • BC-2.5.1

        Any recommendations made must be appropriate to the customer'sG needs. The recommendation must include an explanation as to how the recommended product suits the customer'sG identified needs. Where more than one product is recommended as appropriate to the customer'sG needs, the recommendation must include an explanation of the differences in and relative costs in the alternative options.

        Amended: January 2007

      • BC-2.5.2

        In the case of compulsory insurance, such as third party motor liability insurance, the explanation of the product's suitability may be limited to a brief explanation of the obligation to hold such insurance, and the options available to satisfy the obligation.

      • BC-2.5.3

        The objective of Paragraph BC-2.5.1 is to ensure that a customerG is provided with sufficient information with which to make an informed decision. An insurance firmG is able to rely on the customer'sG explanation of his insurance needs and is not otherwise required to verify the customer'sG own assessment of his needs. Given the customer'sG stated needs, the insurance firmG must explain how the proposed contract(s) would meet those needs, and provide sufficient information regarding the different options so that the customerG is able to make an informed decision.

        Amended: January 2007

    • BC-2.6 Customer Information before Commitment to the Contract

      • BC-2.6.1

        Before customersG make their final commitment to enter into a contract of insuranceG , licensees must provide to the customerG sufficient information on the key features of the product being proposed to enable the customerG to make an informed purchasing decision, including:

        (a) The identity of the insurance licenseeG ;
        (b) All the important details of cover and benefits;
        (c) Any significant or unusual restrictions or exclusions, conditions or obligations attaching to the customerG ; and
        (d) The period of cover.
        Amended: January 2007
        Amended: October 2007

      • BC-2.6.2

        Before customersG make their final commitment to enter into a contract of insuranceG , licensees must provide to the customerG full details of costs of the insurance products and services being offered, including:

        (a) The level of insurance premiums, the periodicity of payment and any grace periods allowed for payment;
        (b) The consequences of discontinuing the payment of any premium; and
        (c) Any fees and charges other than the insurance premium.
        Amended: January 2007
        Amended: October 2007

      • BC-2.6.3

        While an insurance brokerG may not approach every possible underwriter for each risk, he should make reasonable efforts to make his selection from a panel of insurance firmsG . An insurance broker'sG submission of quotations should incorporate the reasons for recommending or choosing an insurance firmG .

      • BC-2.6.4

        Except for clientsG with turnover exceeding BD 1 million per year, an insurance intermediaryG must draw the client'sG attention to the status of the insurance firmG : i.e. 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.

        Amended: January 2007

      • BC-2.6.5

        An insurance intermediaryG should recommend, in the first instance, a policy from a CBB licensed insurer (which, for the avoidance of doubt, may be an overseas insurance firmG ) that he considers best suited to the needs of his clientG , and offering ease of client service, claims handling, etc. Paragraph BC-2.6.4 covers the situation where an insurance intermediaryG proposes use of an overseas insurer not licensed or incorporated in Bahrain, because of the lack of availability of local cover.

        Amended: January 2007

      • BC-2.6.6

        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.

      • BC-2.6.7

        Before customersG make a final commitment to enter into a contract of insuranceG , licensees must inform the customerG of their key obligations and rights with regard to the transaction, including:

        (a) The customer'sG duty of disclosure to the insurance licenseeG ;
        (b) Cancellation rights and conditions;
        (c) The licensee's internal complaints procedure; and
        (d) The licensee's obligations in respect of this Code.
        Amended: January 2007
        Amended: October 2007

      • BC-2.6.8

        There are no specific requirements prescribing customers'G cancellation rights or required standards of cancellation terms for insurance products and customersG . It is expected that licensees will put in place cancellation terms that are fair, reasonable and appropriate with respect to their customersG and the products provided, in line with the overarching principles requiring fair dealings with customersG (see Paragraph BC-2.1.1). The CBB will monitor the regulatory performance of the market in this area, and may make amendments over time (see Paragraphs BC-1.1.11, BC-1.1.12).

        Amended: January 2007

    • BC-2.7 Confirmation of Cover and Policy Documentation

      • BC-2.7.1

        On the conclusion of contracts, licensees must provide customersG with prompt written confirmation and details of the insurance that has been effected, including:

        (a) The date when cover starts and the period of cover;
        (b) Any certificates or documents which the customerG is required to have by law;
        (c) Details of how the customerG can make a claim, and their responsibilities in relation to making claims;
        (d) The address of the insurer to which all communications in respect of the policy should be sent; and
        (e) Proof of payment where applicable.
        Amended: January 2007

      • BC-2.7.2

        Licensees must provide full policy documentation promptly following the conclusion of contracts, unless this has already been issued with the confirmation of cover.

    • BC-2.8 Service after the Point of Sale

      • BC-2.8.1

        Licensees must respond to and administer customers'G requests for amendments to their insurance policies in a timely manner. In particular, licensees must:

        (a) Provide written confirmation of any changes/amendments to the policy;
        (b) Provide full details of any additional premium or charges to be paid by or returned to the customerG ;
        (c) Provide any certificate or documentation which the customerG is required to have by law;
        (d) Provide proof of payment of additional premium or charges where applicable; and
        (e) Remit any refunds of premiums or charges due to customersG without undue delay.
        Amended: January 2007

    • BC-2.9 Claims

      • BC-2.9.1

        In addition to the requirements under Paragraph BC-2.9.2, where licensees' insurance activities include the handling of claims, they must:

        (a) Respond promptly when claims are first notified, and provide customersG with an explanation about how the claim will be handled and any actions required of the customerG ;
        (b) Provide reasonable guidance to customersG in pursuing their claim;
        (c) Consider and handle claims fairly and promptly, and keep the customerG informed of progress;
        (d) Inform customersG in writing, with an explanation, if the licenseeG is unable to deal with all or any part of the claim; and
        (e) Forward settlement of claims without undue delay, once settlement has been agreed.
        Amended: April 2016
        Amended: October 2007
        January 2007

      • BC-2.9.2

        Where an insurance firmG deals with medical insurance and handles all the claim processing activities directly, i.e. without using a TPA:

        (a) It must process and settle all medical claims with policyholders within 15 calendar days from the receipt of all necessary documents; and
        (b) It must process and settle claims from healthcare service providers within 30 calendar days from the receipt of all necessary documents from the healthcare service providers.
        April 2016

      • BC-2.9.3

        Insurance firmsG must comply with Paragraph BC-2.9.2 by 30th September 2016 at the latest.

        April 2016

    • BC-2.10 Renewal, Expiry and Cancellation

      • BC-2.10.1

        Licensees must notify customersG of the renewal or expiry of their policy in time to allow the customerG to consider and rearrange any continuing cover they may need, including:

        (a) Details of the renewal terms, if offered; and
        (b) Details of any changes to the cover, service or insurance firmG being offered.
        Amended: January 2007

      • BC-2.10.2

        On expiry or cancellation of insurance policies, at the request of the customerG , licensees must make available all documentation and information to which the customerG is entitled in a timely manner.

    • BC-2.11 [This section was deleted in October 2011]

      • BC-2.11.1

        [This paragraph was deleted in October 2011]

        Deleted: October 2011

      • BC-2.11.2

        [This paragraph was deleted in October 2011]

        Deleted: October 2011
        Amended: January 2007

      • BC-2.11.3

        [This paragraph was deleted in October 2011]

        Deleted: October 2011
        Amended: January 2007

      • BC-2.11.4

        [This paragraph was deleted in October 2011]

        Deleted: October 2011
        Amended: January 2007

      • BC-2.11.5

        [This paragraph was deleted in October 2011]

        Deleted: October 2011
        Amended: October 2007
        Amended: January 2007

    • BC-2.12 Information Conditions

      • BC-2.12.1

        Licensees must ensure that all information presented to customersG in accordance with this Code shall be clear, fair and not misleading, and comprehensible to the customerG having regard to the complexity of the products and services being offered and the customer'sG knowledge.

      • BC-2.12.2

        Licensees must ensure that customerG information presented to customersG in accordance with this Code is provided in an appropriate format with regard to the complexity of the product being discussed. In particular:

        (a) As a general rule, all information to be provided to the customerG in accordance with this Code is to be in writing, on paper or other durable medium available and accessible to the customerG . If the information is initially presented orally, supporting written information must be provided in addition;
        (b) In the case of telephone selling and other forms of selling where it is impractical to provide information to the customerG in writing at the point of sale, information shall be provided to the customerG in accordance with Subparagraph BC-2.12.2(a) immediately following conclusion of the contract; and
        (c) By way of derogation from Subparagraph BC-2.12.2(a), information may be provided orally without supporting written information where the customerG requests it, or where immediate cover is necessary.
        Amended: January 2007

    • BC-2.13 Fair Treatment and Conflicts of Interest

      • BC-2.13.1

        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. In particular, licensees who act on behalf of their customersG must not put their own interests above their duty to any customersG for whom they act.

      • BC-2.13.2

        Insurance intermediariesG must disclose in writing to the clientG any relationship that he may have with an insurance firmG that he is recommending to his clientG and which may result in a potential conflict of interest including, but not limited to, disclosure in writing any association arising from common shareholderG /controllerG /DirectorG .

        Amended: January 2007

    • BC-2.14 Confidentiality and Security of Customer Assets

      • BC-2.14.1

        Licensees must ensure that any information obtained from customersG must not be used or disclosed except in the normal course of negotiating, maintaining or renewing insurance for that customerG , unless:

        (a) They have the customer'sG consent;
        (b) Disclosure is made in accordance with the licensee's regulatory obligations; or
        (c) The licensee is legally obliged to disclose the information.
        Amended: January 2007

      • BC-2.14.2

        Licensees must take appropriate steps to ensure the security of any money, documents, other property or information handled or held on behalf of customersG .

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