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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > High Level Standards > GR General Requirements
  • GR General Requirements

    • GR-A Introduction

      • GR-A.1 Purpose

        • Executive Summary

          • GR-A.1.1

            The General Requirements Module presents a variety of different requirements that are not extensive enough to warrant their own stand-alone Module, but for the most part are of general applicability. These include requirements on books and records; on the use of corporate and trade names; and on controllersG and close linksG . Each set of requirements is contained in its own Chapter: a table listing these and their application to licensees is given in Chapter GR-B.

        • Legal Basis

          • GR-A.1.2

            This Module contains the Central Bank of Bahrain's ('CBB') Directive (as amended from time to time) regarding general requirements applicable to insurance licenseesG , 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'). This Module contains the requirements governing control in insurance licensees under Resolution No (27) of 2015. Requirements regarding transfer of business (see Chapter GR-4) are also included in this Module in line with Resolution No (15) of 2009. It also contains the minimum qualifications and fit and proper requirements for appointed representativesG issued in 2009 under Resolution 11 in accordance with Article 74 of the CBB Law.

            Amended: October 2015
            Amended: January 2011
            Amended: October 2009
            Added: January 2007

          • GR-A.1.3

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

            Added: January 2007

      • GR-A.2 Module History

        • GR-A.2.1

          This Module 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 quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

          Amended: January 2007

        • GR-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.

          Added: January 2007

        • GR-A.2.3

          A list of recent changes made to this Module is detailed in the table below:

          Module Ref. Change Date Description of Changes
          GR-B.1 01/07/05 Clarified that GR-7 also applies to insurance brokers.
          GR-7.1 01/07/05 Corrected that cash deposit requirements also apply to insurance brokers and simplified the calculation of cash deposit required for insurance firms.
          GR-1.2 01/10/05 Clarified that transaction records must be maintained in Bahrain.
          GR-4.4 01/10/05 Corrected cross-reference.
          GR-6.1 01/10/05 Corrected references to Forms.
          GR-10.1 01/10/05 Clarified when evidence of professional indemnity coverage is to be provided and corrected cross-reference.
          GR-7.1 01/01/06 Clarified that insurance licensees originally licensed as exempt companies can opt to have their cash deposit maintained with the CBB.
          GR-7.1.2 01/04/06 Clarified that the requirement to maintain a cash deposit does not apply to insurance firms that are in run-off and whose license is restricted from entering into new contracts of insurance.
          GR-10.1.7 01/04/06 Clarified the meaning of the clause required dealing with an automatic extended reporting period.
          GR-A.1.2 01/2007 New Rule introduced, categorising this Module as a Directive.
          GR-B.1.1 01/2007 Clarified that Chapters GR-4 and GR-8 apply to all insurance licensees.
          GR-1.1 01/2007 Rule amended and Guidance added with respect to translation and archiving of books and records.
          GR-2.1.1 01/2007 Clarified the vetting of names for subsidiaries.
          GR-4 01/2007 This Chapter applies to all insurance licensees and was amended to be aligned with the requirements of the CBB Law.
          GR-5.1 01/2007 Minor changes to align controller requirements with the CBB Law.
          GR-5.2 01/2007 Clarification of definition of controller.
          GR-5.3 01/2007 Clarification of criteria for assessing suitability of controllers.
          GR-5.4 01/2007 Alignment of procedures for approving controllers with CBB Law.
          GR-7.1.1 01/2007 Reference to CBB Law on requirement for a cash deposit..
          GR-7.1.3 01/2007 Paragraph deleted as now redundant since captive insurers are exempted from a cash deposit requirement as per GR-7.1.2.
          GR-7.2.1 01/2007 Rule deleted.
          GR-8 01/2007 This Chapter applies to all insurance licensees and was amended to be aligned with the requirements of the CBB Law.
          GR-10.1.13 01/2007 Clarified the format of the notice related to the professional indemnity coverage.
          GR-1.2.1 and 1.2.5 10/2007 Clarified the record retention period for customer and transaction records in line with Article 60 of the CBB Law.
          GR-10.1.1A 04/2008 Added Guidance concerning limitations on indemnification coverage.
          GR-3.1 04/2009 Clarified the rules governing the request for CBB no-objection on any dividend proposed.
          GR-A.1.2 10/2009 Added the legal requirements as per Article 74 of the CBB Law.
          GR-5.4.2 10/2009 Guidance amended to be consistent with wording under Article 53(a) of the CBB Law.
          GR-9 10/2009 Incorporated the requirements of Resolution 11 as per Article 74 of the CBB Law.
          GR-A.1.2 01/2011 Clarified legal basis
          GR-5.3 10/2011 Amended to be in line with other Volumes of the CBB Rulebook and to reflect the issuance of Resolution No.(43) of 2011.
          GR-8.1 10/2011 Clarified language on cessation of business to be in line with other Volumes of the CBB Rulebook.
          GR-B.1.1 04/2012 Amended to reflect the deletion of certain Paragraphs in Section GR-1.2.
          GR-1.2 04/2012 Amendments made to reflect the issuance of Module CL (Client Money).
          GR-6.1 04/2012 Clarified that the reporting requirements for close links are only applicable to insurance firms and insurance brokers.
          GR-2.2 10/2014 New Section added regarding publication of documents by the licensee.
          GR-A.1.2, GR-B.1.2 and GR-5 10/2015 Updated to reflect issuance of Resolution No. (27) of 2015 governing control in insurance licensees.
          GR-7.1 07/2016 Amended requirements for cash deposit.
          GR-8.1.14 10/2016 Added additional requirements for cessation of business to be in line with all Volumes.
          GR-5.1.5 01/2017 Consistency of notification timeline rule on controllers with other Volumes of the CBB Rulebook.
          GR-1.2.5 07/2017 Amended paragraph according to the Legislative Decree No. (28) of 2002.
          GR-1.2.6 07/2017 Deleted paragraph.
          GR-3.1.1A 10/2017 Added additional requirement to submit when requesting no-objection letter for proposed dividend.
          GR-1.1.2 10/2018 Amended Paragraph to be consistent with other Volumes.
          GR-5.1.1A 04/2019 Added a new Paragraph on exposure to controllers.
          GR-5.1.1B 04/2019 Added a new Paragraph on exposure to controllers.

        • GR-A.2.4

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

          Amended: January 2007

    • GR-B Scope of Application

      • GR-B.1 Insurance Licensees

        • GR-B.1.1

          The requirements in Module GR (General Requirements) apply to insurance licenseesG , as follows:

          Chapter Application to license categories Application to activities of overseas insurance licensees
          GR-1 Applies to all insurance licenseesG ; but GR-1.2.9 to GR-1.2.12 apply to insurance brokersG only. Applies to Bahrain branch business only.
          GR-2 Applies to all insurance licenseesG . Applies to Bahrain branch business only.
          GR-3 Applies to Bahraini insurance licenseesG except captives, who are exempted. Exempted.
          GR-4 Applies to all insurance licenseesG ; conditional exemptions for captives and reinsurers apply (cf. GR-4.2.2 and GR-4.4.4). Applies to Bahrain branch business only.
          GR-5 GR-5.1 to GR-5.4 apply to the whole firm. Only GR-5.5 applies.
          GR-6 Applies to all insurance licenseesG . Applies to the whole corporate entity.
          GR-7 Applies to insurance firmsG and insurance brokersG . Applies to Bahrain branch business only.
          GR-8 Applies to all insurance licenseesG ; captives may seek exemption from GR-8.1.5 and GR-8.1.6. Applies to Bahrain branch business only.
          GR-9 Applies to insurance firmsG only. Applies to Bahrain branch business only.
          GR-10 Applies to insurance brokersG and insurance consultantsG only. Applies to Bahrain branch business only.
          Amended: October 2015
          Amended: April 2012
          Amended: October 2007
          Amended: January 2007

    • GR-1 Books and Records

      • GR-1.1 General Requirements

        • GR-1.1.1

          The requirements in Chapter GR-1 apply in full to Bahraini insurance licenseesG . The requirements in Chapter GR-1 also apply to overseas insurance licenseesG , but only with respect to the business booked in their branch in Bahrain and the records of that branch.

        • GR-1.1.2

          All insurance licenseesG must maintain books and records (whether in electronic or hard copy form) sufficient to produce financial statements and show a complete record of the business undertaken by a licensee, including records sufficient to verify the identity of customersG . These records must be retained for at least 10 years according to Article 60 of the CBB Law.

          Amended: October 2018
          Amended: January 2007

        • GR-1.1.3

          For those insurance firmsG granted grandfathering provisions as per Paragraph AU-1.1.15, separate books and records must be maintained in respect of both general and long-term insurance businessG . The transactions relating to each kind of business must be maintained separately. The insurance firmG must maintain such accounting and other records as necessary to identify all assets and liabilities in respect of each kind of business.

          Amended: January 2007

        • GR-1.1.4

          Unless otherwise agreed to with the CBB in writing, records must be kept in either English or Arabic. Any records kept in other languages must be accompanied by a certified English or Arabic translation. Records must be kept current. The records must be sufficient to allow an audit of the licensee's business or an on-site examination of the licensee by the CBB.

          Amended: January 2007

        • GR-1.1.4A

          Translations produced in compliance with Rule GR-1.1.4 may be undertaken in-house, by an employee or contractor of the licensee, providing they are certified by an appropriate officer of the licensee.

          Added: January 2007

        • GR-1.1.5

          For captive insurersG , the maintenance of books and records may be carried out by an insurance managerG . Should this be the case, the captive insurerG must ensure that the CBB has access to these records at any time. In addition, these records must be sufficient to allow an audit or an on-site examination by the CBB of the captive insurerG .

          Amended: January 2007

        • GR-1.1.6

          Records must be accessible at any time from within the Kingdom of Bahrain, or as otherwise agreed with the CBB in writing.

          Amended: January 2007

        • GR-1.1.7

          Where older records have been archived, or in the case of records relating to overseas branches of Bahraini insurance licenseesG , the CBB may accept that records be accessible within a reasonably short time frame (e.g. within 5 business days), instead of immediately. The CBB may also agree similar arrangements for overseas insurance licenseesG , as well as Bahraini insurance licenseesG , where elements of record retention and management have been centralised in another group company, whether inside or outside of Bahrain.

          Added: January 2007

      • GR-1.2 Customer and Transaction Records

        • Customer Records

          • GR-1.2.1

            Insurance licenseesG must keep records with respect to all customerG relationships that remain active or potentially active. These records must be in hard copy or in original form, and retained for at least ten years after a customerG relationship has terminated.

            Amended: October 2007

          • GR-1.2.2

            CustomerG records include original account opening and due diligence documentation including identification information, sufficient to confirm compliance with all statutory and regulatory Know Your Customer requirements (see Module FC).

          • GR-1.2.3

            The requirement in Paragraph GR-1.2.1 applies to all customerG facilities booked in Bahrain by the licensee or where a customerG relationship is administered from Bahrain. Licensees may not use record-keeping systems outside Bahrain for customerG business booked in Bahrain, except for back-up purposes only.

          • GR-1.2.4

            For captive insuranceG , where the customersG are limited to related companiesG , the due diligence requirement does not apply.

            Amended: January 2007

        • Transaction Records

          • GR-1.2.5

            Insurance licenseesG must keep completed transaction records for as long as they are relevant for the purposes for which they were made (with a minimum period in all cases of five years from the date when the transaction was completed) – see Module Section FC-7.1). Records of completed transactions must be kept whether in hard copy or electronic format as per the Legislative Decree No. (28) of 2002 with respect to Electronic Transactions "The Electronic Transaction Law" and its amendments.

            Amended: July 2017
            Amended: October 2007
            Amended: January 2007

          • GR-1.2.6

            [This Paragraph has been deleted in July 2017].

            Deleted: July 2017

          • GR-1.2.7

            In the case of Bahraini insurance licenseesG , the requirement in Paragraph GR-1.2.5 applies only to transactions relating to business booked in Bahrain by the licensee. It does not relate to transactions relating to business booked in overseas branchesG or subsidiariesG of the licensee.

            Amended: January 2007

          • GR-1.2.8

            In the case of overseas insurance licenseesG , all the requirements of Chapter GR-1 are limited to the business booked in their branch in Bahrain and the records of that branch (see GR-1.1.1).

        • Keeping of Separate Client Accounts

          • GR-1.2.9

            An insurance brokerG must, in connection with any premiums received in the course of its business, establish and maintain separate clientG accounts separate from those used for its own funds.

          • GR-1.2.9A

            Specific Rules and guidance dealing with the holding of client money are contained in Module CL (Client Money).

            Added: April 2012

          • GR-1.2.10

            An insurance brokerG must not make withdrawals from its clientG accounts for any purposes other than those of the clientG .

          • GR-1.2.11

            Payment of premiums to insurance firmsG , or commissions (brokerage) to the insurance broker'sG own accounts shall not be effected until the premiums to which these payments relate have been duly received from that clientG and credited to the clientG account.

          • GR-1.2.12

            In respect of premiums booked in Bahrain, in relation to residents and non-residents of Bahrain, these accounts are to be maintained with a retail bank licensed to operate in the Kingdom of Bahrain.

            Amended: January 2007

          • GR-1.2.13

            [This Paragraph was deleted in April 2012].

            Deleted: April 2012

          • GR-1.2.14

            [This Paragraph was deleted in April 2012 and new guidance is now contained in Paragraph CL-1.1.9].

            Deleted: April 2012

          • GR-1.2.15

            [This Paragraph was deleted in April 2012 and new guidance is now contained in Paragraph CL-1.1.10].

            Deleted: April 2012

          • GR-1.2.16

            [This Paragraph was deleted in April 2012].

            Deleted: April 2012

      • GR-1.3 Other Records

        • GR-1.3.1

          Insurance licenseesG must maintain the following records in original form or in hard copy at their premises in Bahrain:

          (a) Internal policies, procedures and operating manuals;
          (b) Corporate records, including minutes of shareholders'G , Directors'G and management meetings;
          (c) Accounts, books, files and other records that adequately record all the business affairs of the insurance licenseeG , and any other records that substantiate the value of the assets, liabilities and off-balance sheet activities of the licensee;
          (d) Correspondence with the CBB and records relevant to monitoring compliance with CBB requirements;
          (e) Reports prepared by the insurance licensee'sG internal and external auditors; and
          (f) Employee training manuals and records.
          Amended: January 2007

        • GR-1.3.2

          In the case of Bahraini insurance licenseesG , these requirements apply to the licensee as a whole, including any overseas branchesG . In the case of overseas insurance licenseesG , all the requirements of Chapter GR-1 are limited to the business booked in their branchG in Bahrain and the records of that branchG (see GR-1.1.1). Overseas insurance licenseesG are thus not required to hold copies of shareholders'G and Directors'G meetings, except where relevant to the branch'sG operations.

          Amended: January 2007

    • GR-2 Corporate and Trade Names

      • GR-2.1 Vetting of Names

        • GR-2.1.1

          Insurance licenseesG , other than captive insurersG , must seek prior approval from the CBB for their corporate name and any trade names, and those of their subsidiariesG located in Bahrain.

          Amended: January 2007

        • GR-2.1.2

          GR-2.1.1 applies to overseas insurance licenseesG only with respect to their Bahrain branchG .

          Amended: January 2007

        • GR-2.1.3

          In approving a corporate or trade name, the CBB seeks to ensure that it is sufficiently distinct as to reduce possible confusion with other unconnected businesses, particularly those operating in the financial services sector. The CBB also seeks to ensure that names used by unregulated subsidiariesG do not suggest those subsidiariesG are in fact regulated.

          Amended: January 2007

      • GR-2.2 Publication of Documents by the Licensee

        • GR-2.2.1

          Any written communication, including stationery, business cards or other business documentation published by the licenseeG , or used by its employees (agents, representatives, financial advisers or introducers) must include a statement that the licenseeG is regulated by the Central Bank of Bahrain, the type and category of license and the legal status. Additionally, written communication (stationery) should state the authorised and paid up capital of the licenseeG . All licenseesG should comply with this requirement by 31st December 2014 at the latest.

          Added: October 2014

    • GR-3 Dividends

      • GR-3.1 CBB Non-Objection

        • GR-3.1.1

          Bahraini insurance licenseesG , other than captive insurersG , must obtain a letter of no-objection from the CBB to any dividend proposed, before announcing the proposed dividend by way of press announcement or any other means of communication and prior to submitting a proposal for a distribution of profits to a shareholderG vote.

          Amended: January 2007
          Amended: April 2009

        • GR-3.1.1A

          When submitting a request for a letter of no-objection for proposed dividend, the request made by the insurance licenseeG must:

          (a) Be made at a minimum 3 working days before the proposed announcement;
          (b) Include a copy of the draft audited financial statements for the year to which the request for the proposed dividend pertains to; and
          (c) Include a detailed analysis of the impact of the proposed dividend on the capital adequacy and solvency margin requirements as outlined in Module CA (Capital Adequacy) of Volume 3 CBB Rulebook and the liquidity position of the licensee.
          Amended: October 2017
          Added: April 2009

        • GR-3.1.1B

          To comply with the requirements of Subparagraph GR-3.1.1A (c), the insurance licensee should complete and submit to the CBB those pages of the Insurance Firm Return (Form IFR) pertaining to the capital adequacy and solvency margin requirements.

          Added: April 2009

        • GR-3.1.2

          Upon receiving the request in accordance with all the requirements in Paragraph GR-3.1.1A, the CBB will provide a reply to the insurance licenseeG before the scheduled annual general meeting of the shareholders.The CBB will grant a no-objection letter where it is satisfied that the level of dividend proposed is unlikely to leave the licensee vulnerable — for the foreseeable future — to breaching the CBB's financial resources requirements, taking into account (as appropriate) trends in the licensee's business volumes, expenses, claims experience and investment environment. Where there are major concerns about the potential impact of a proposed dividend, the CBB may require an actuarial report to be provided.

          Amended: January 2007
          Amended: April 2009

        • GR-3.1.3

          Insurance licenseesG , subject to Paragraph GR-3.1.1, should provide the CBB with a copy of the proposed agenda for the annual general meeting or other special meeting, noting the licensee's intended declared dividends for the coming year.

          Amended: January 2007
          Amended: April 2009

    • GR-4 Business Transfers

      • GR-4.1 CBB Approval

        • GR-4.1.1

          In accordance with Article 66 of the CBB Law, an insurance licenseeG must seek prior written approval from the CBB before transferring any of its business to a third party.

          Amended: January 2007

        • GR-4.1.2

          Rule GR-4.1.1 is intended to apply to circumstances where an insurance licenseeG wishes to transfer all or part of its business to a third party. A business transfer is not the same as an insurance firmG ceding (reinsuring) some or all of its policyholderG liabilities to a reinsurer. Reinsurance creates an additional set of rights and obligations between the insurance firmG and the reinsurer but does not change the insurance firm'sG obligations to its policyholdersG nor does it create any direct obligations (to each other) between the insurance firm'sG policyholdersG and the insurance firm'sG reinsurer.

          Added: January 2007

        • GR-4.1.3

          In the case of a Bahraini insurance licenseeG , Chapter GR-4 applies both to business booked in Bahrain and in the licensee’s overseas branchesG . In the case of an overseas insurance licenseeG , Chapter GR-4 applies only to business booked in the firm's Bahrain branchG .

          Amended: January 2007

        • GR-4.1.4

          In all cases, CBB approval to transfer business will only be given where:

          (a) The transfer of business will not damage or otherwise prejudice the legitimate interests of the licensee’s customersG ;
          (b) The transferee is duly licensed to undertake the business which it is to receive; and
          (c) The CBB is satisfied that the transfer will not breach any applicable Laws and regulations, and would not create any supervisory concerns.
          Added: January 2007
          Amended: October 2007

        • GR-4.1.5

          For purposes of Paragraph GR-4.1.1, a business transfer refers to a transfer of all the rights and obligations of one insurance licenseeG to another insurance licenseeG , so that the policyholdersG and reinsurers continue to be subject to the same terms and conditions as those originally agreed. Business transfers may enable licensees that have ceased writing certain lines of business to manage their affairs more effectively and be beneficial both to the insurance licenseeG and the policyholdersG , particularly if the insurance licenseeG that is assuming the business is financially stronger than the insurance licenseeG transferring the business.

          Amended: January 2007

        • GR-4.1.6

          In assessing the criteria outlined in Paragraph GR-4.1.4, the CBB will, amongst other factors, take into account the financial strength of the transferee; its capacity to manage the business being transferred; its track record in complying with applicable regulatory requirements; and (where applicable) its track record in treating customersG fairly. The CBB will also take into account the impact of the transfer on the transferor, and any consequences this may have for the transferor’s remaining customersG .

          Amended: January 2007

      • GR-4.2 Procedure with Respect to Applications

        • GR-4.2.1

          Insurance licensees seeking to obtain the CBB’s permission to transfer business must apply to the CBB in writing, in the form of a covering letter, together with supporting attachments. Unless otherwise directed by the CBB, the application must provide:

          (a) Full details of the business to be transferred including a detailed list of all liabilities that will be transferred, including the name of the individual policyholderG , where applicable, related outstanding liabilities and the jurisdiction where the insurance risk is situated;
          (b) The rationale for the proposed transfer;
          (c) If applicable, an assessment of the impact of the transfer on any customersG directly affected by the transfer, and any mitigating factors or measures;
          (d) If applicable, an assessment of the impact of the transfer on the transferor’s remaining business and customersG , and any mitigating factors or measures; and
          (e) Evidence that the proposed transfer has been duly authorised by the transferor (such as a certified copy of a Board resolution approving the transfer).
          Amended: January 2007

        • GR-4.2.2

          Subject to the CBB's review, the requirements of Paragraph GR-4.2.1 do not apply to the transfer of the portfolio from a captive insurerG or to a business transfer entirely comprising reinsurance business, where all of the policyholdersG affected by the transfer have given their consent.

          Amended: January 2007

        • GR-4.2.3

          Insurance licenseesG intending to apply for a transfer of business are advised to contact the CBB at the earliest possible opportunity, in order that the CBB may determine the nature and level of documentation to be provided and the need for actuarial or other expert opinion to be provided to support the application. Transfers of long-term business will in all cases require an actuarial evaluation to be provided to the CBB. An affected policyholderG is a policyholderG whose policy is included in the transfer, or his policy is with the transferor and the CBB has ruled, after consulting the transferor, that the policyholder'sG rights and obligations under the policy will or may be materially affected by the transfer.

          Amended: January 2007

        • GR-4.2.4

          The CBB will consider an application under Paragraph GR-4.1.1 if it is satisfied that:

          (a) Any objections received to the application to transfer the business following its publication in the Official Gazette and in two daily newspapers in the Kingdom of Bahrain (one in Arabic and one in English) as required under Article 66(b) have been reviewed and resolved by the CBB;
          (b) Except in so far as the CBB has otherwise directed, a copy of the notice that has been sent to every affected policyholderG and every other person who claims an interest in a policy included in the proposed transfer (and has given written notice of his claim to the transferor);
          (c) Copies of a statement setting out particulars of the transfer, approved by the CBB, have been available for inspection at one or more places in Bahrain for at least 30 days, from the date of publication of the notice specified in GR-4.2.4(a); and
          (d) Where the proposed transfer includes any contract of direct insurance and the risk is situated in a jurisdiction other than Bahrain, a statement setting out particulars of the transfer, approved by the CBB, has been available for inspection at one or more places in that jurisdiction for at least 30 days, starting with the date of publication of the notice specified in sub- Paragraph GR-4.2.4 (a).
          Added: January 2007

        • GR-4.2.5

          The CBB notice referred to in Paragraph GR-4.2.4 (a) will include a statement that written representations concerning the transfer may be sent to the CBB within three months from the date of publication. The notice shall specify the period during which the policyholderG may exercise any right to cancel the policy. The CBB will not decide on the application until after considering any representations made to the CBB within the prescribed time period. In all cases, the costs of publication of this notice must be met by the transferor.

          Amended: January 2007

        • GR-4.2.6

          Where the risk is situated in a jurisdiction other than Bahrain, the law of the jurisdiction in which the risk is situated shall determine whether the policyholderG has a right to cancel the policy, and the conditions applicable to any such right.

          Added: January 2007

        • GR-4.2.7

          The CBB reserves the right to impose additional requirements if, in the opinion of the CBB, additional requirements are necessary to protect policyholderG interests. In all cases where requirements are imposed, the CBB shall state the reasons for doing so.

          Amended: January 2007

      • GR-4.3 Determination of Applications

        • GR-4.3.1

          The CBB will not approve the transfer, under the terms of Paragraph GR-4.2.1, unless it is satisfied that:

          (a) The transferee is authorised to carry on regulated insurance servicesG in Bahrain or (where relevant) is authorised or otherwise permitted to carry on regulated insurance servicesG in the jurisdiction where any overseas risks are situated;
          (b) Every policy included in the transfer evidences a contract which was entered into before the date of the application;
          (c) The transferee possesses the necessary margin of solvency, required by the regulatory authorities to which he is subject to, after taking the proposed transfer into account;
          (d) Where policies are being transferred from an overseas branchG of the insurance licenseeG , or the transferee is an overseas insurance licenseeG , the relevant overseas regulatory authority has been consulted about the proposed transfer, the law of that jurisdiction provides for the possibility of such a transfer, and the relevant supervisory authority in that jurisdiction has agreed to the transfer; and
          (e) There are no material adverse consequences from the transfer on the transferee or the security of policyholdersG .
          Amended: January 2007

      • GR-4.4 CBB Decision

        • GR-4.4.1

          In accordance with Article 67 (d), the CBB’s decision regarding the application for transfer made under Section GR-4.3, will be published as a notice in the Official Gazette and in two local news papers (one in Arabic and one in English). If the liabilities are located in a jurisdiction outside Bahrain, the CBB may also publish such notice in the jurisdiction in which the risk is situated. In all cases, the costs of publication of this notice must be met by the transferor.

          Amended: January 2007

        • GR-4.4.2

          [This Paragraph was deleted in January 2007].

          Amended: January 2007

        • GR-4.4.3

          [This Paragraph was moved to Section GR-4.2 in January 2007].

          Amended: January 2007

        • GR-4.4.4

          The requirement in Paragraph GR-4.4.1 does not have to be met in respect of a transfer of business where the transferor is a Category C1 captive insurance firmG .

        • GR-4.4.5

          Article 67(e) notes that where the application for business transfer has been turned down by the CBB or includes restrictions, the applicant may appeal to a competent court within 30 calendar days from the date of publication referred to in Paragraph GR-4.4.1.

          Added: January 2007

    • GR-5 Controllers

      • GR-5.1 Key Provisions for Bahraini Insurance Licensees

        • GR-5.1.1

          Bahraini insurance licenseesG must obtain prior approval from the CBB for any of the following changes to their controllersG (as defined in Section GR-5.2):

          (a) A new controllerG ;
          (b) An existing controllerG increasing its holding from 10% to 20%;
          (c) An existing controllerG increasing its holding from below 20% to 30%;
          (d) An existing controllerG increasing its holding from below 30% to 40%;
          (e) An existing controllerG increasing its holding to above 40% for licensees not listed on any exchange in Bahrain or abroad; and
          (f) An existing controllerG reducing its holding to below 10%.
          Amended: October 2015
          Amended: January 2007

        • GR-5.1.1A

          LicenseesG must not incur or otherwise have an exposure (either directly or indirectly) to their controllersG , including subsidiariesG and associatedG companies of such controllersG .

          Added: April 2019

        • GR-5.1.1B

          For the purpose of Paragraph GR-5.1.1A, licenseesG that already have an exposure to controllersG must have an action plan agreed with the CBB's supervisory point of contact to address such exposures within a timeline agreed with the CBB.

          Added: April 2019

        • GR-5.1.2

          Articles 52 to 56 of the CBB Law require notification to the CBB of all controllersG of licensees and of listed companies; it further gives the CBB the right to refuse approval of controllersG if deemed damaging to the interests of the market, customersG , or in contravention of the criteria set by the CBB.

          Amended: January 2007
          Amended: October 2007

        • GR-5.1.3

          [This Paragraph was deleted in October 2015.]

          Deleted: October 2015
          Amended: January 2007

        • GR-5.1.4

          Requests for approval under Paragraph GR-5.1.1 must be made by submitting a duly completed Form 2 (Application for Authorisation of Controller) to the CBB.

          Amended: October 2015
          Amended: January 2007

        • GR-5.1.4A

          Where the direct controllerG of a Bahraini insurance licenseeG is not the ultimate parent undertakingG of the licenseeG , the CBB will require that Form 2 be completed by the ultimate parent undertakingG and that the details be provided of the structure of the group, clearly detailing the relationship between the licenseeG and the ultimate parent undertakingG (e.g. by providing an organisational structure of the group).

          Added: October 2015

        • GR-5.1.4B

          Bahraini insurance licenseesG must immediately notify the CBB in case of any material change to the information provided in a Form 2 submitted for a controllerG .

          Added: October 2015

        • GR-5.1.4C

          Where a controller is a legal person, any change in its shareholding must be notified to the CBB as the earlier of:

          (a) When the change takes effect; and
          (b) When the controller becomes aware of the proposed change.
          Added: October 2015

        • GR-5.1.5

          If, as a result of circumstances outside the Bahraini insurance licensee'sG knowledge and/or control, one of the changes specified in Paragraph GR-5.1.1 is triggered prior to CBB approval being sought or obtained, the insurance licenseeG must notify the CBB no later than 15 calendar days from the date on which those changes have occurred.

          Amended: January 2017
          Amended: October 2015
          Amended: January 2007

        • GR-5.1.5A

          For approval under Rule GR-5.1.1 to be granted, the applicant must satisfy the CBB that the proposed change in controllerG poses no undue risks to the licensee or its customers, and is not damaging to the interests of the market, as defined in the suitability criteria for controllersG , contained under Section GR-5.3.

          Added: October 2015

        • GR-5.1.6

          An approval of controllerG is valid for the period specified in the approval letter issued by the CBB. The CBB may impose any restrictions that it considers necessary to be observed when granting its approval.

          Amended: January 2007

        • GR-5.1.7

          Bahraini insurance licenseesG must submit, within 3 months of their financial year-end, a report on their controllersG . This report must identify all controllersG of the licensee, as defined in Section GR-5.2. This report is included as part of the CBB annual reporting requirements in Forms IFR or IBR (depending on the type of license issued).

          Amended: October 2015
          Amended: January 2007

      • GR-5.2 Definition of Controller of a Bahraini Insurance Licensee

        • GR-5.2.1

          A controllerG of a Bahraini insurance licenseeG is a natural or legal person who, either alone or with his associates:

          (a) Holds 10% or more of the issued and paid up capital in the licenseeG or parent undertakingG ; or
          (b) Is able to exercise more than 10% of the voting power over the licenseeG or the parent undertakingG .
          Amended: October 2015
          Amended: January 2007

        • GR-5.2.2

          For the purposes of Paragraph GR-5.2.1, 'associate' includes:

          (a) In the case of natural persons, a member of the controller'sG familyG ;
          (b) An undertaking of which controllerG is a DirectorG ;
          (c) A person who is an employee or partner of a controllerG ;
          (d) If the controllerG is a legal person, a DirectorG of the controllerG , a subsidiaryG of the controllerG , or a DirectorG of any subsidiaryG of the controllerG .
          (e) Any other person or undertaking with which the controllerG has entered into an agreement or arrangement as to the acquisition, holding or disposal of shares or other interests in the insurance licenseeG , or under which they undertake to act together in exercising their voting power in relation to the insurance licenseeG .
          Amended: October 2015
          Amended: January 2007
          Amended: October 2007

        • GR-5.2.3

          In addition to the provisions of this Chapter, listed companies and their controllersG shall be bound by the CBB's regulatory requirements for capital markets stipulated in the CBB's Rulebook related to changes in the ownership of shares in listed companies. For overseas insurance licenseesG , Section GR-5.5 shall apply.

          Amended: October 2015
          Amended: January 2007

        • GR-5.2.4

          For the avoidance of doubt, the management company of a captive insurerG is not automatically a controllerG of the firm.

          Amended: January 2007

        • GR-5.2.5

          The restrictions set forth in this Chapter shall apply to any changes in the legality of the shares' ownership of the controllersG in the licenseesG , or to the voting powers the controllersG are entitled to in the licenseesG . Failure to comply with such restrictions shall result in the imposition of penalties as indicated in Module EN (Enforcement) of the CBB Rulebook. The imposition of such penalties shall not affect the CBB's right to impose other penalties and to take any other administrative measures against the controllerG in accordance with the provisions of the Law including preventing the controllerG from exercising his voting right or transferring of shares.

          Added: October 2015

      • GR-5.3 Suitability of Controllers for Bahraini Insurance Licensees

        • GR-5.3.1

          Bahraini insurance licenseesG must satisfy the CBB of the suitability of their proposed controllersG .

          Amended: October 2015
          Amended: October 2011
          Amended: January 2007

        • GR-5.3.1A

          [This Paragraph was deleted in October 2015.]

          Deleted: October 2015
          Adopted: October 2011

        • Natural Persons

          • GR-5.3.2

            The percentage of direct or indirect control of a natural person in a Bahraini insurance licenseeG must not exceed 30% of the issued and paid up capital. This limit does not apply to insurance consultantsG nor to insurance managersG .

            Added: October 2015

          • GR-5.3.3

            In assessing the suitability of controllersG who are natural persons, the CBB will consider the following:

            (a) Whether the approval or refusal of a controllerG is or could be detrimental to the licenseeG , Bahrain's financial sector and the national interest of the Kingdom of Bahrain;
            (b) The legitimate interests of clients, creditors, non-controlling interests, and all other stakeholders of the licenseeG ;
            (c) A conviction or finding of guilt in respect of any offence, other than a minor traffic offence, by any court or competent jurisdiction;
            (d) Any adverse finding in a civil action by any court or competent jurisdiction, relating to fraud, misfeasance or other misconduct in connection with the formation or management of a corporation or partnership;
            (e) Whether the person has been the subject of any disciplinary proceeding by any government authority, regulatory agency or professional body or association;
            (f) The contravention of any financial services legislation or regulation;
            (g) Whether the person has ever been refused an authorisation as controllerG , a license to undertake regulated activities by the CBB or any other regulator in another jurisdiction;
            (h) Dismissal or a request to resign from any office or employment;
            (i) Disqualification by a court, regulator or other competent body, as a DirectorG or as a manager of a corporation;
            (j) Whether the person has been a DirectorG , partner or manager of a corporation or partnership which has gone into liquidation or administration or declared bankrupt or one or more of its partners or managers have been declared bankrupt;
            (k) The extent to which the person has been truthful and open with regulators;
            (l) Whether the person has ever been adjudged bankrupt, entered into any arrangement with creditors in relation to the inability to pay due debts, or failed to satisfy a judgement debt under a court order or has defaulted on any debts;
            (m) The track record as a controllerG in another company or investor in a financial institution, whether in the Kingdom of Bahrain or abroad;
            (n) The financial resources of the person and the stability of their shareholding;
            (o) Existing Directorships or ownership of more than 20% of the issued or paid up capital in any financial institution in the Kingdom of Bahrain or elsewhere, and the potential for conflicts of interests that such Directorships or ownership may imply;
            (p) The ability of the person to deal with existing shareholdersG and the Board in a constructive and co-operative manner; and
            (q) The propriety of a person's conduct, whether or not such conduct resulted in conviction for a criminal offence, the contravention of a law or regulation, or the institution of legal or disciplinary proceedings.
            Amended: October 2015
            Amended: July 2007
            Amended: October 2007

        • Unregulated Legal Persons

          • GR-5.3.3A

            The percentage of direct or indirect control of an unregulated legal person in a Bahraini insurance licenseeG must not exceed 30% of the issued and paid up capital.

            Added: October 2015

          • GR-5.3.4

            In assessing the suitability of controllersG who are unregulated legal persons, the CBB will consider the following:

            (a) Whether their approval or refusal of a controllerG is or could be detrimental to the licenseeG , Bahrain's financial sector and the national interest of the Kingdom of Bahrain;
            (b) The legitimate interests of investors, creditors, non-controlling interests and all other stakeholders of the licenseeG
            (c) The financial strength of the controllerG , its parent(s) and its subsidiaries, its implications for the insurance licenseeG and the likely stability of the controller'sG shareholding in the insurance licenseeG ;
            (d) Whether the unregulated legal person or any of its subsidiaries or any of its shareholders have ever been adjudged bankrupt, or failed to satisfy a judgement debt under a court order, or have defaulted on any debts, or entered into any arrangement with creditors in relation to the inability to pay due debts;
            (e) The controller'sG jurisdiction of incorporation, location of Head Office, group structure and close linksG , and the implications for the insurance licenseeG as regards effective supervision of the insurance licenseeG and potential conflicts of interest;
            (f) The controller'sG (and other subsidiaries') propriety and general standards of business conduct, including the contravention of any laws or regulations related to financial services, or the institution of disciplinary proceedings by a government authority, regulatory agency or professional body;
            (g) Any conviction related to fraud, misfeasance or other misconduct;
            (h) Whether the unregulated legal person or any of its subsidiaries has been subject to any disciplinary proceeding whether by court order any proceeding by a specialised body, and whether the unregulated legal person is sued in any court;
            (i) The extent to which the controllerG or its subsidiaries have been truthful and open with regulators and supervisors;
            (j) Whether the unregulated legal person has ever been refused an authorisation as controllerG , a license to undertake regulated activities by the CBB or any other regulator in another jurisdiction;
            (k) The track record as a controllerG or investor in financial institutions;
            (l) The ability of the unregulated legal person to deal with existing shareholdersG and the Board in a constructive and co-operative manner;
            (m) Directorships in the Kingdom of Bahrain or elsewhere or ownership of more than 20% of the capital or voting rights of any financial institution, and the potential for conflicts of interest that such directorships or ownership may imply; and
            (n) Whether the unregulated legal person or any of its subsidiaries have ever entered into any arrangement with creditors in relation to the inability to pay due debts.
            Amended: October 2015
            Amended: July 2007

        • Regulated Legal Persons

          • GR-5.3.5

            The percentage of direct or indirect control of a regulated legal person in a Bahraini insurance licenseeG must not exceed 40% of the issued and paid up capital.

            Added: October 2015

          • GR-5.3.6

            The 40% limit referred to in Paragraph GR-5.3.5 does not apply to Bahraini insurance licenseesG not listed on a licensed exchangeG or an exchange abroad, or to mergers or acquisitions which have been approved by the CBB.

            Added: October 2015

          • GR-5.3.7

            Subject to the discretion of the CBB, regulated financial institutions may be allowed to own or control holdings of voting capital of listed licensees in excess of the abovementioned 40% level, if such control is not detrimental to the licenseeG , Bahrain's financial sector and the national interest of the Kingdom of Bahrain.

            Added: October 2015

          • GR-5.3.8

            Regulated financial institutions wishing to acquire more than 40% of the voting capital of a Bahraini insurance licenseeG must observe the criteria set forth in Guidance GR-5.3.4 related to unregulated legal persons, in addition to the conditions set forth under Guidance GR-5.3.9.

            Added: October 2015

          • GR-5.3.9

            In assessing the suitability of controllersG who are regulated legal persons, the CBB will consider the following:

            (a) The person must be subject to effective consolidated supervision by a supervisory authority which effectively implements the Basel Committee on Banking Supervision Core Principles, or the IOSCO Core Principles or the IAIS Core Principles as well as the FATF Recommendations on Money Laundering and the financing of terrorism & proliferation;
            (b) The home supervisorG of the person must give its formal written prior approval for (or otherwise raise no objection to) the proposed acquisition of the Bahraini insurance licenseeG ;
            (c) The home supervisorG of the person must confirm to the CBB that it will require the person to consolidate the activities of the concerned Bahraini insurance licenseeG for regulatory and accounting purposes if the case so requires;
            (d) The home supervisorG of the person must formally agree to the exchange of customer information between the person and its prospective Bahraini subsidiary/acquisition for AML/CFT purposes and for Large Exposures monitoring purposes;
            (e) The home supervisorG of the person and the CBB must conclude a Memorandum of Understanding in respect of supervisory responsibilities, exchange of information and mutual inspection visits; and
            (f) The person must provide an acceptably worded letter of guarantee to the CBB in respect of its obligation to support the licenseeG , should such letter be requested.
            Added: October 2015

      • GR-5.4 Approval Process for Bahraini Insurance Licensees

        • GR-5.4.1

          Within 3 months of receipt of an approval request under Paragraph GR-5.1.1, with the complete documentation requirements to the satisfaction of the CBB, the CBB will issue a written notice of approval or of refusal by registered mail, to the Bahraini insurance licenseeG and the applicant. Where an approval notice is given, it will specify the period for which it is valid and any conditions that may be applied.

          Amended: October 2015
          Amended: July 2007

        • GR-5.4.1A

          The CBB may refuse an application for approval if the applicant does not meet the criteria set forth in Section GR-5.3. The notice of refusal will specify the reasons for the objection and specify the applicant's right of appeal.

          Added: October 2015

        • GR-5.4.2

          Article 53 of the CBB Law allows the CBB up to 3 months in which to respond to an application, although the CBB aims to respond within 30 calendar days. Notices of refusal have to be approved by the concerned Executive Director of the CBB.

          Amended: October 2015
          Amended: October 2009
          Amended: July 2007

        • Appeal Process

          • GR-5.4.2A

            The applicant has 30 calendar days from the date of a notice in which to appeal a decision to refuse the application or any conditions imposed as a condition of approval. The CBB then has 30 calendar days from the date of the appeal in which to consider any mitigating evidence submitted and make a final determination.

            Added: October 2015

          • GR-5.4.3

            Where a person has become a controllerG by virtue of their shareholding in contravention of Paragraph GR-5.1.1, or a notice of refusal has been served on them under Paragraph GR-5.4.1 and the period of appeal has expired, the CBB may, by notice in writing served on the person concerned, instruct the person concerned to transfer such shares, or refrain from exercising voting rights in respect of such shares.

            Amended: July 2007

          • GR-5.4.4

            If the person concerned fails to take the action specified under Paragraph GR-5.4.3, then the CBB may seek a court order to take appropriate measures: these may include forcing the person to sell their shares.

            Adopted: July 2007

          • GR-5.4.5

            [This Paragraph was deleted in October 2015.]

            Deleted: October 2015
            Adopted: July 2007
            Amended: October 2007

          • GR-5.4.6

            Bahraini insurance licenseesG are encouraged to notify the CBB as soon as they become aware of events that are likely to lead to changes in their controllersG , both through new controllersG coming in or existing controllersG ceasing to have control.

            Amended: October 2015
            Amended: October 2007
            Adopted: July 2007

          • GR-5.4.7

            The CBB may contact references and supervisory bodies in connection with any information provided to support an application for controllerG . The CBB may also ask for further information, in addition to that provided in the Form 2, if required to satisfy itself as to the suitability of the applicant.

            Added: October 2015

          • GR-5.4.8

            In accordance with Paragraph EN-8.2.6, and where a controllerG is a natural person, the CBB may, depending on the seriousness of a situation, impose enforcement measures, which may include disqualification from being a controllerG of any licensed firm.

            Added: October 2015

      • GR-5.5 Key Provisions for Overseas Insurance Licensees

        • GR-5.5.1

          In the case of overseas insurance licenseesG , the branch must notify the CBB of any new significant ownership in excess of 50% of the issued and paid up capital of the concerned licensee'sG direct parent undertakingG as soon as the branch becomes aware. The overseas insurance firm licenseeG must provide a copy of the relevant approval by the home supervisorG of the parent. The CBB will take the appropriate action in such case.

          Added: October 2015

        • GR-5.5.2

          In assessing the suitability of a controllerG of the parent of an overseas insurance licenseeG , the CBB will take into regard that the change in control poses no undue risks to the licenseeG or its customers, and is not damaging to the interests of the market.

          Added: October 2015

        • GR-5.5.3

          Overseas insurance licenseesG must submit, within 3 months of their financial year-end, a report on their controllersG . This report must identify all controllersG of the branch, and details of the type of control.

          Added: October 2015

        • GR-5.5.4

          For overseas insurance licenseesG , the controllerG is the direct parent undertakingG . Any material changes as outlined in Paragraph GR-5.5.1, to the control of the direct parent undertakingG must be filed through submission of an updated Form 2 to the CBB.

          Added: October 2015

    • GR-6 Close Links

      • GR-6.1 Key Provisions

        • GR-6.1.1

          Condition 3 of the CBB's licensing conditions specifies, amongst other things, that insurance licenseesG must satisfy the CBB that their close linksG do not prevent the effective supervision of the licensee and otherwise pose no undue risks to the licensee. (See Paragraph AU-2.3.1).

          Amended: July 2007

        • GR-6.1.2

          Applicants for an insurance license must provide details of their close linksG , as provided for under Form 1 (Application for a License). (See Paragraph AU-5.1.5).

          Amended: October 2007

        • GR-6.1.3

          Insurance firmsG and insurance brokersG must submit to the CBB, attached to their annual return and within 3 months of their financial year-end, a report on their close linksG . The report must identify all undertakings closely linked to the licensee, as defined in Section GR-6.2.

          Amended: April 2012
          Amended: July 2007

        • GR-6.1.4

          Insurance licenseesG may satisfy the requirement in Paragraph GR-6.1.3 by submitting a corporate structure chart, identifying all undertakings closely linked to the licensee. In the case of insurance firmsG , the report is included as part of the Insurance Firm Return (Form IFR (C) or IFR (T)). In the case of insurance brokersG , the report is included as part of the the Insurance Broker Return (Form IBR).

          Amended: April 2012
          Amended: July 2007

        • GR-6.1.5

          Insurance licenseesG must provide information on undertakings with which they are closely linked, as requested by the CBB.

          Amended: July 2007

      • GR-6.2 Definition of Close Links

        • GR-6.2.1

          An insurance licenseeG ('A') has close links with another undertaking ('C'), if:

          (a) C is a parent undertakingG of A;
          (b) C is a subsidiaryG of A;
          (c) C is a parent undertakingG of a subsidiaryG of A;
          (d) C is a subsidiaryG of a parent undertakingG of A;
          (e) C owns or controls 20% or more of the voting rights or capital of A; or
          (f) A, any of its parentG or subsidiariesG , or any of the subsidiariesG of its parentG , owns or controls 20% or more of the voting rights or capital of C.
          Amended: July 2007
          Amended: October 2007

      • GR-6.3 Assessment Criteria

        • GR-6.3.1

          In assessing whether an insurance licensee'sG close linksG may prevent the effective supervision of the firm, or otherwise poses no undue risks to the insurance licenseeG , the CBB takes into account the following:

          (a) Whether the CBB will receive adequate information from the insurance licenseeG , and those with whom the licensee has close linksG , to enable it to determine whether the licensee is complying with CBB requirements;
          (b) The structure and geographical spread of the licensee, its group and other undertakings with which it has close linksG , and whether this might hinder the provision of adequate and reliable flows of information to the CBB, for instance because of operations in territories which restrict the free flow of information for supervisory purposes;
          (c) In the case of an overseas insurance licenseeG , whether the insurance licenseeG and its group will be subject to supervision on a consolidated basis (for example, if a financial resources requirement is determined for the group as a whole); and
          (d) Whether it is possible to assess with confidence the overall financial position of the group at any particular time, and whether there are factors that might hinder this, such as group members having different financial year ends or auditorsG , or the corporate structure being unnecessarily complex and opaque.
          Amended: July 2007

    • GR-7 Statutory Deposits and Compulsory Reserve

      • GR-7.1 Requirement for a Cash Deposit

        • GR-7.1.1

          Article 181 of the CBB Law governs the deposits required by insurance licenseesG .

          Amended: July 2007
          Amended: October 2007

        • GR-7.1.2

          Insurance firmsG , except for captive insurersG and insurance firmsG who are in run-off and whose license is restricted from entering into new contracts of insuranceG as per Paragraph GR-8.1.3, must maintain a cash deposit with a retail bank licensed to do business in Bahrain, for the following amounts:

          (a) BD 50,000 for life insurance and/or savings and fund accumulation categories;
          (b) BD 75,000 for any insurance category of general insurance for all insurance categories; and
          (c) BD 150,000 for firms solely effecting reinsurance contracts.
          Amended: July 2007

        • GR-7.1.3 [This Paragraph was deleted in January 2007].

          Deleted: July 2007

        • GR-7.1.4

          Insurance brokersG must maintain a cash deposit with a retail bank licensed to do business in Bahrain for the following amounts:

          (a) BD 2,500 for life insurance and savings and fund accumulation categories; and
          (b) BD 5,000 for general insurance for all insurance categories.
          Amended: July 2007

        • GR-7.1.5

          The cash deposit must be in the name of the insurance firmG or insurance brokerG and for the order of the CBB. The cash deposit and accumulated interest (or profit) thereon may not be disposed of except by written permission of the CBB.

          Amended: July 2016
          Amended: July 2007

        • GR-7.1.6

          The deposit and any of its accumulated interest (if any) may be moved to another retail bank licensed to do business in Bahrain, providing that prior written approval has been obtained from the CBB. When seeking CBB approval, the insurance licenseeG must provide a valid reason for requesting the move to another retail bank.

          Amended: July 2016
          Amended: July 2007

        • GR-7.1.7

          In the case of insurance licenseesG originally licensed as exempt companies, insurance licenseesG may opt to have the cash deposit required as per Paragraphs GR-7.1.2 and GR-7.1.4 maintained with the CBB.

          Amended: July 2007

      • GR-7.2 Compulsory Reserve

        • GR-7.2.1 [This Paragraph was deleted in January 2007].

          Deleted: July 2007

        • GR-7.2.2

          In accordance with the Bahrain Commercial Companies Law, Bahraini insurance licenseesG must comply with the statutory requirements of this law requiring that 10% of annual profits be set aside as a statutory reserve. The requirements of the Bahrain Commercial Companies Law note that the balance of such reserve is to equal 50% of the paid-up capital of the company.

          Amended: July 2007

    • GR-8 Cessation of Business

      • GR-8.1 CBB Approval

        • GR-8.1.1

          As specified in Article 50 of the CBB Law, an insurance licenseeG wishing to cease to provide or suspend any or all its regulated insurance servicesG , completely or at any of its branches and/or liquidate its business must obtain prior written approval from the CBB.

          Amended: October 2011
          Amended: July 2007

        • GR-8.1.2

          If the insurance licenseeG wishes to effect a business transfer, it must also comply with the requirements contained in Chapter GR-4.

          Amended: July 2007

        • GR-8.1.3

          In the case of a Bahraini insurance licenseeG , Chapter GR-8 applies both to its business booked in Bahrain and in the licensee's overseas branchesG . In the case of an overseas insurance licenseeG , Chapter GR-8 applies only to business booked in the licensee's Bahrain branchG .

          Adopted: July 2007

        • GR-8.1.4

          Insurance licenseesG seeking to obtain the CBB's permission to cease business must apply to the CBB in writing, in the form of a covering letter together with any supporting attachments. Unless otherwise directed by the CBB, the following requirements must be provided in support of the request:

          (a) Full details of the business to be terminated;
          (b) The rationale for the cessation;
          (c) If applicable, an assessment of the impact of the cessation on any customersG directly affected by the cessation, and any mitigating factors or measures;
          (d) If applicable, an assessment of the impact of the cessation on the licensee'sG remaining business and customersG , and any mitigating factors or measures;
          (e) Evidence that the proposed cessation has been duly authorised by the licenseeG (such as a certified copy of a Board resolution approving the cessation);
          (f) How the licenseeG proposes to cease business;
          (g) Notice of an Extraordinary Meeting setting out the agenda to discuss and approve the cessation, and inviting the CBB for such meeting;
          (h) Formal request to the CBB for the appointment of a liquidator acceptable to the CBB;
          (i) A cut-off date by which the licenseeG will stop its operations;
          (j) If the insurance licenseeG wishes to cease its whole business, confirmation that the licenseeG will not enter into new business with effect from the cut-off date;
          (k) The audited accounts of the licenseeG as of the last date on which it stopped operations. The commencement of the period covering these final accounts should be the beginning of the financial year of the licenseeG ; and
          (l) The final liquidator's report of the licenseeG .
          Amended: October 2011
          Adopted: July 2007

        • GR-8.1.5

          LicenseesG intending to apply to cease business are advised to contact the CBB at the earliest possible opportunity, prior to submitting a formal application, in order that the CBB may determine the nature and level of documentation to be provided and the need for an auditorG or other expert opinion to be provided to support the application. The documentation specified in Paragraph GR-8.1.4 may be varied by the CBB, depending on the nature of the proposed cessation, such as the materiality of the business concerned and its impact on customersG .

          Amended: October 2011
          Adopted: July 2007

        • GR-8.1.6

          Approval to cease business will generally be given where adequate arrangements have been made to offer alternative arrangements to any affected customersG . The CBB's approval may be given subject to any conditions deemed appropriate by the CBB. In all cases where additional requirements are imposed, the CBB shall state the reasons for doing so.

          Adopted: July 2007

        • GR-8.1.7

          When the CBB has given its approval to an application to cease business, the licenseeG must publish a notice of its intention to cease business in two local newspapers (one in Arabic, the other in English). Notices must also be displayed in the premises (including any branch offices) of the licensee concerned. These notices must be given not less than 30 calendar days before the cessation is to take effect, and must include such information as the CBB may specify. If the insurance licenseeG had entered into direct contracts of insuranceG relating to risks situated in a jurisdiction other than Bahrain, a notice must also be published in two national newspapers in the jurisdiction concerned.

          Amended: October 2011
          Amended: October 2007
          Adopted: July 2007

        • GR-8.1.8

          If the insurance licenseeG wishes to go into run-off or liquidate its business, the CBB will revise its license to restrict the firm from entering into new contracts of insuranceG . The insurance licenseeG must continue to comply with all applicable CBB requirements until such time as it is formally notified by the CBB that its obligations have been discharged and that it may surrender its license.

          Amended: October 2011
          Amended: July 2007

        • GR-8.1.9

          An insurance firmG in run-off must continue to meet its contractual and regulatory obligations to policyholdersG .

          Amended: July 2007

        • GR-8.1.10

          The notices referred to in Paragraph GR-8.1.7 must include a statement that written representations concerning the cessation of business may be sent to the CBB before a specified day, which shall not be earlier than thirty calendar days after the day of the first publication of the notice. The CBB will not decide on the application until after considering any representations made to the CBB before the specified day.

          Amended: October 2011
          Amended: July 2007

        • GR-8.1.11

          If no objections to the cessation of business are upheld by the CBB, then the CBB will issue a written notice of approval for the cessation of business and where the insurance licenseeG is leaving the market such notice will also provide for the surrender of the license and for the return of the insurance licensee'sG statutory deposit.

          Amended: July 2007

        • GR-8.1.12

          As per Article 49 of the CBB Law, the CBB shall publish its approval to cancel or amend a license in the Official Gazette as well as in two local daily newspapers (one in Arabic, and the other in English), once this decision has been implemented. The publication costs of these notices are to be met by the licensee concerned.

          Adopted: July 2007
          Amended: October 2007

        • GR-8.1.13

          Upon application, the CBB may grant exemptions to the disclosure requirements of Paragraphs GR-8.1.7 for captive insurersG . However, all other provisions of Chapter GR-8 apply in full to captive insurersG .

          Amended: July 2007

        • GR-8.1.14

          Upon satisfactorily meeting the requirement set out in GR-8.1.4, the insurance licensee must surrender the original license certificate issued by the Licensing & policy Directorate at the time of establishment, and submit confirmation of the cancellation of its commercial registration from the Ministry of Industry, Commerce and Tourism.

          Added: October 2016

    • GR-9 Appointed Representatives

      • GR-9.1 Key Provisions

        • GR-9.1.1

          An insurance firmG may appoint as its representative for its Bahrain business a person who is not licensed by the CBB, known as an appointed representativeG . However, appointed representativesG must be registered with the CBB. Insurance firmsG that appoint appointed representativesG are called licensed principalsG .

          Amended: October 2009
          Amended: July 2007

        • GR-9.1.1A

          This Chapter does not apply to insurance firmsG whose business is limited to reinsurance.

          Adopted: October 2009

        • GR-9.1.1B

          Insurance licenseesG , other than insurance firmsG , may not appoint appointed representativesG . More specifically, insurance brokersG may not appoint representatives acting on their behalf.

          Adopted: October 2009

        • GR-9.1.1C

          The requirements for registration and minimum qualifications of appointed representativesG are effective 1st January 2010 (refer to ES-2.5.4).

          Adopted: October 2009

        • GR-9.1.2

          Appointed representativesG are persons acting on behalf, and under the overall control of a licensed principalG . They are effectively an extension of the licensed principalG . The licensed principalG takes full responsibility for the actions of their appointed representativesG vis-à-vis the CBB. Note that only insurance firmsG may act as licensed principalsG .

          Amended: July 2007

        • GR-9.1.3

          An appointed representativeG may be a natural or corporate person. An appointed representative may be a CBB licensed firm (e.g. a bank) that does not hold any of the permissions of insurance firmG , insurance brokerG , or insurance consultantG . Where the appointed representativeG is a corporate entity, its memorandum and articles of association must include the activities of the appointed representativeG of the CBB licensed insurance firmG , as required under Resolution 11 issued as per Article 74 of the CBB Law.

          Amended: October 2009
          Amended: July 2007

        • GR-9.1.3A

          An appointed representativeG must be registered with the CBB in accordance with Paragraph AU-1.3A.

          Adopted: October 2009

        • GR-9.1.4

          An appointed representativeG may have agencies with no more than one licensed principalG per type of business. For the purposes of this requirement the types of business are as follows:

          (a) General insurance as defined in Paragraph AU-1.4.9; and
          (b) Long-term insurance (as defined in Paragraph AU-1.4.8).
          Amended: October 2009
          Amended: July 2007

        • GR-9.1.4A

          An appointed representativeG that is authorised to conduct both Islamic and conventional business by virtue of its license provided by the CBB, may have different agencies per type of business, for both Islamic and conventional insurance business.

          Adopted: October 2009

        • GR-9.1.5

          An appointed representativeG may only undertake the types of business for which the licensed principalG is authorised to undertake by the CBB.

          Amended: July 2007

        • GR-9.1.5A

          An insurance firmG can only nominate appointed representativesG that meet minimum qualifications and fit and proper requirements of the CBB.

          Adopted: October 2009

        • GR-9.1.5B

          For purposes of Paragraph GR-9.1.5A, the minimum qualifications of appointed representativesG recognised by the CBB are:

          (a) For general insurance, the Award in General Insurance from the Chartered Insurance Institute (CII) and the Bahrain Institute of Banking and Finance (BIBF); and
          (b) For long-term insurance, the Award in Financial Planning from the Chartered Insurance Institute (CII) and the Bahrain Institute of Banking and Finance (BIBF).
          Adopted: October 2009

        • GR-9.1.5C

          Upon written application to the CBB, equivalent or higher qualification from an internationally recognised insurance institute may be acceptable, provided it substantially covers the core syllabuses of the minimum qualifications outlined in Paragraph GR-9.1.5B.

          Adopted: October 2009

        • GR-9.1.5D

          Where the appointed representativeG is a retailer of goods, including motor vehicles, or a travel agent selling insurance policies or helping customers make a claim under the policy and the insurance services provided are complementary to the main activity conducted by the appointed representativeG , an exemption from the requirements of Paragraph GR-9.1.5B may be sought by the licensed principalG . A request for such exemption must be submitted in writing to the Director, Insurance Supervision outlining what alternative training has been provided to the appointed representativeG to ensure that potential policyholdersG are treated in a fair and equitable manner and that the provision of insurance coverage complies with all the requirements outlined in Module BC, and in particular with Chapter BC-2, The Insurance Code of Practice.

          Adopted: October 2009

        • GR-9.1.6

          In the case where an appointed representativeG acts as agent for more than one licensed principalG , it must arrange its business to achieve reasonable segregation between principals to allow each licensed principalG to carry out monitoring of its business under its agency agreement.

        • GR-9.1.7

          An appointed representativeG must maintain separate bank accounts for any monies relating to premiums and claims handled on behalf of each licensed principalG .

        • GR-9.1.8

          An appointment by an insurance firmG of an appointed representativeG must be the subject of a written contract of agency. This contract must state, inter alia:

          (a) The name of the appointed representativeG ;
          (b) The name of the licensed principalG ;
          (c) That the licensed principalG is responsible for the actions and conduct of the representative concerned when acting or purporting to act under it (without prejudice to any rights to bring actions for damages by the licensed principalG against the appointed representativeG or vice versa);
          (d) The type(s) of business for which the agency is granted;
          (e) That the appointed representativeG allows full access to the CBB, the licensed principalG and the licensed principal'sG external auditorsG , given reasonable notice, to all records relating to the business falling within its agency;
          (f) The terms and conditions for the handling of and accounting for client money, including a statement that the appointed representativeG is acting solely as agent of the licensed principalG in the handling of such money;
          (g) The conditions for cancellation, which cannot alter or cancel the continuing responsibility of the licensed firm to take responsibility for the representative's action and conduct (without prejudice to any rights to bring actions for damages by the licensed firm against the representative or vice versa); and
          (h) That the appointed representativeG is prohibited from carrying on agencies with other licensed principalsG for the same type of business, in accordance with Paragraph GR-9.1.4, or may do so in accordance with Paragraph GR-9.1.4A, for conventional and Takaful insurance.
          Amended: October 2009
          Amended: July 2007

        • GR-9.1.9

          The powers of access given to the CBB and the licensed principal'sG auditorsG by Sub-paragraph GR-9.1.8 (e) are in order to ensure that the agency between the licensed principalG and the appointed representativeG does not impede the effective supervision of the licensed principalG by the CBB.

          Amended: July 2007

        • GR-9.1.10

          Once appointed, the licensed principalG must take full responsibility for the actions and conduct of the appointed representativeG , in respect of any matters of compliance with, or breach of, the requirements of the CBB Rulebook that relate to activities of the appointed representativeG acting within the real or implied authority of the licensed principalG . This is without prejudice to any rights of redress the licensed principalG may have at law against the appointed representativeG .

          Amended: July 2007

        • GR-9.1.11

          The licensed principalG must ensure that the appointed representativeG complies with the provisions of the CBB Rulebook applicable to the activities being undertaken in accordance with the agency, including, but not limited to:

          (a) Record-keeping;
          (b) Business conduct; and
          (c) Financial crime requirements.
          Amended: July 2007

        • GR-9.1.12

          The licensed principalG must ensure that periodic monitoring of the appointed representativeG is undertaken to ensure the adequacy of the systems and controls in place. The licensed principalG or an appropriately qualified independent party may undertake this monitoring.

        • GR-9.1.13

          All appointments of appointed representativesG , variations in terms of appointment and cancellations of appointment must be notified in writing to the CBB no later than 5 working days after they have taken place. Such notifications must be addressed to the Director, Licensing & Policy Directorate.

          Amended: October 2009
          Amended: July 2007

        • GR-9.1.14

          An appointed representativeG must at all times act within the limits of his authority in the conduct of activities covered by the terms of the agency agreement.

        • GR-9.1.15

          An appointed representativeG must disclose to clients the relationship that he has with the licensed principalG and any other parties that could reasonably be considered material to the insurance contract.

    • GR-10 Professional Indemnity Coverage

      • GR-10.1 Insurance Brokers and Insurance Consultants

        • GR-10.1.1

          Insurance brokersG and insurance consultantsG must maintain professional indemnity coverage, acceptable to the CBB, with a minimum limit of indemnity for any one claim and in any one insurance period of 12 months. Insurance brokersG and insurance consultantsG must provide, upon request, evidence to the CBB of the coverage in force.

          Amended: July 2007

        • GR-10.1.1A

          In accordance with Paragraph EN-B.3.1, insurance licenseesG may not enter into or make a claim under a contract of insurance that is intended to, or has the effect of, indemnifying them from the financial penalties provided for in Module EN.

          Added: April 2008

        • GR-10.1.2

          The requirements for professional indemnity coverage will normally be met by the insurance brokerG or insurance consultantG obtaining an insurance policy from an insurance firmG . However, upon written application to the CBB, coverage may be met by the insurance brokerG or insurance consultantG depositing with a retail bank licensed to operate in the Kingdom of Bahrain, an amount, specified by the CBB, to be held in escrow against future claims. This amount will not be less than the minimum required policy limit.

          Amended: July 2007
          Amended: April 2008

        • GR-10.1.3

          The minimum limit of indemnity is BD 100,000 for insurance brokersG and BD 75,000 for insurance consultantsG .

        • GR-10.1.4

          Other than in the case of Paragraph GR-10.1.2, the maximum excess or deductible allowable under the policy shall be BD 15,000.

        • GR-10.1.5

          Branches of insurance brokersG or insurance consultantsG of a company incorporated under the laws of its territory of incorporation must provide evidence of professional indemnity coverage maintained by their company and specifically indicating that the coverage of the professional indemnity extends to the operations of the branch resident in Bahrain.

        • GR-10.1.6

          Unless the licensee has access to the professional indemnity cover meeting the minimum requirements of Paragraphs GR-10.1.3 and GR-10.1.4 provided to its parentG company, separate professional indemnity cover will need to be provided.

          Amended: July 2007

        • GR-10.1.7

          Unless otherwise agreed in writing with the CBB, the policy must contain a clause that it may not be cancelled or lapsed without the prior approval of the CBB. The policy must also contain a provision for an automatic extended reporting period in the event that the policy is cancelled or lapsed, such that claims relating to the period during which the policy was in force may subsequently still be reported.

          Amended: July 2007

        • GR-10.1.8

          If an insurance brokerG or insurance consultantG applies to the CBB for a voluntary surrender of its authorisation, it must ensure that suitable arrangements are in place for professional indemnity coverage to continue in respect of any unreported claims arising from past sales or advice.

          Amended: July 2007

        • GR-10.1.9

          The CBB will not allow a voluntary surrender of authorisation to take effect until the insurance licenseeG , in the opinion of the CBB, has discharged all its regulatory responsibilities to its customersG . See also Section AU-5.5, on the cancellation of authorisation.

          Amended: July 2007

        • GR-10.1.10

          Except as provided for by Paragraph ES-2.5.3, professional indemnity coverage requirements must be met by insurance brokersG and insurance consultantsG by 31 December 2005 (refer to ES-2.5.2).

          Amended: July 2007

        • GR-10.1.11

          Unincorporated Bahraini insurance brokersG licensed prior to 1 June, 2005 must meet the professional indemnity coverage requirements by 31 December 2006 (refer to ES-2.5.3).

          Amended: July 2007

        • GR-10.1.12

          Insurance brokersG and insurance consultantsG must prominently display in their premises a notice stating that they have in place professional indemnity coverage that meet the minimum requirements of the CBB and the period of coverage, such that claims relating to the period during which the policy was in force may subsequently still be reported.

          Amended: July 2007

        • GR-10.1.13

          The above notice may be either issued by the insurance firmG providing the coverage on behalf of the insurance licenseeG , or by the licensee itself. The notice should specify the main features of the coverage maintained (or, where relevant, the amount of funds placed in escrow, in accordance with Paragraph GR-10.1.2). It should also specify the procedures for submitting a claim under the coverage maintained.

          Adopted: July 2007

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