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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > CL Client Money > CL-2 Holding of Client Money
  • CL-2 Holding of Client Money

    • CL-2.1 Systems and Controls

      • CL-2.1.1

        Insurance brokersG and appointed representativesG must establish and maintain effective systems and controls to ensure the fulfillment of their fiduciary responsibilities towards their clients particularly protecting client moneyG .

        April 2012

    • CL-2.2 Arrangements to Hold Client Money

      • CL-2.2.1

        Except as otherwise indicated, in order to ensure adequate protection of client moneyG , insurance brokersG and appointed representativesG must follow one of two approaches or a mix of both for holding client moneyG :

        (a) Transfer the risk from the insurance brokerG to the insurance firm(s)G ; or
        (b) Segregate client moneyG into client money accountsG that cannot be used to reimburse other creditors if an insurance brokerG or appointed representativeG fails.
        April 2012

      • CL-2.2.2

        For purposes of subparagraph CL-2.2.1 (a), funds paid directly to insurance firms must not be received by the insurance brokerG or appointed representativeG .

        April 2012

      • CL-2.2.3

        For purposes of Subparagraph CL-2.2.1 (a), a written agreement must be in place between the insurance brokerG or the appointed representativeG and the insurance firmG stating that premiums/ contributions — and if the insurance firmG wishes, premium refunds — are held by the insurance firmG .

        April 2012

      • CL-2.2.4

        For purposes of Subparagraph CL-2.2.1 (b), any client moneyG , an insurance brokerG or corporate appointed representativeG that is a financial institution, receives and holds for an insurance firmG must be held in a client money accountG , properly segregated from the insurance broker'sG and corporate appointed representative'sG own funds.

        April 2012

      • CL-2.2.5

        Individual appointed representativesG and corporate appointed representativesG , other than financial institutions, are not allowed to hold client moneyG and must transfer the credit risk to the insurance firmG .

        April 2012

    • CL-2.3 Brokerage and Premiums/Contributions Collection

      • CL-2.3.1

        In instances when Subparagraph CL-2.2.1(b) applies, the insurance brokerG and corporate appointed representativeG is solely responsible for collecting premiums/contributions from clients and passing these to insurance firmsG . Any refund premiums/contributions due from insurance firmsG , the insurance brokerG and corporate appointed representativeG shall pass these to clients immediately upon receipt from insurance firmsG .

        April 2012

      • CL-2.3.2

        For life/family takaful participating with profit policies, the insurance brokerG and corporate appointed representativeG are prohibited from collecting premiums/contributions from clients. Premiums/contributions must be paid directly by the policyholders/participants to insurance/takaful companies.

        April 2012

      • CL-2.3.3

        Other than noted in Paragraph CL-1.1.6, insurance brokersG and corporate appointed representativesG must pay to insurance firmsG premiums/contributions received no later than (15) calendar days from the date of the receipt of such amounts.

        April 2012

      • CL-2.3.4

        Except as permitted under Paragraph CL-2.3.4A, insurance brokersG and corporate appointed representativesG are prohibited from deducting their brokerage commission from the premiums/contributions account(s). Insurance brokersG and corporate appointed representativesG must be paid separately their brokerage commission from the insurance firmsG after transferring the amounts due (premiums/contributions) to insurance firmsG no later than (10) calendar days from the receipt of the premiums/contributions by insurance firmsG .

        Amended: July 2015
        April 2012

      • CL-2.3.4A

        In instances where international insurance business is involved, where an insurance brokerG is dealing with an international insurance/reinsurance broker, the insurance brokerG may choose to deduct its commission from the premium/contribution account.

        Added: July 2015

      • CL-2.3.5

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

        April 2012

      • CL-2.3.6

        Insurance brokersG can offer other services to the policyholder on behalf of the insurance firm, such as the issuance of policy documentation. Such other services should be dictated in a separate agreement between the insurance brokerG and the insurance firmG ; however, such charges should not result in any additional fees to the policyholder.

        April 2012

    • CL-2.4 Premiums/Contributions Payments

      • CL-2.4.1

        The insurance brokerG must immediately notify in writing the insurance firmG /Takaful firm if the insurance brokerG fails to collect the amount due from the concerned clients within the agreed premiums/contributions payment terms dictated by the insurance firmG .

        April 2012

      • CL-2.4.2

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

        April 2012

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