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  • Chapter Two — Obligations Of Insurance Companies and Organisations

    • Article 11

      The Minister for Commerce and Agriculture shall be empowered to oblige insurance companies and organisations subject to the provisions of this Law to reinsure a certain proportion of direct insurance transactions concluded in Bahrain with a national reinsurance company or companies which he determines. The order of the Minister shall specify the said proportion of direct insurance business and the applicable date thereof.

      The Minister may by a resolution determine the reinsurance commission and the profit commission paid by a reinsurance company to an insurance company for reinsurance transactions if the interest of the public so requires.

      The provisions of this Article shall not apply to reinsurance transactions concluded by a reinsurance company beyond the scope of the instances provided for therein.

    • Article 12

      Bahraini insurance companies and organisation shall set aside a proportion of their annual profits being no less than 10 per cent as a compulsory reserve until the total of such compulsory reserve equals a sum of 100% of the paid-up capital.

    • Article 13

      Insurance companies and organisations subject to the provisions of this Law shall maintain reserve funds for meeting compensations under settlement. Funds equalling the value of transactions which have been voluntarily reinsured shall be exempted from the above.

    • Article 14

      Insurance companies and organisations subject to the provisions of this Law and carrying of life insurance business shall allocate and maintain funds equalling the accounting reserve for all life insurance transactions that they have concluded.

    • Article 15

      Apart from life insurance transactions, all insurance companies and organisations shall set aside and maintain funds the value of which equals 40% of the total premiums underwritten during the year for the purpose of covering the prevailing risks. Such percentage shall be 25% with respect to cargo insurance.

    • Article 16

      Insurance companies and organisations subject to the provisions of this Law shall appoint one auditor or more from amongst the chartered accountants licensed to practise to audit the accounts of the company or organisation.

      An auditor and the reports submitted by him shall be subject to the provisions of Articles 166(2), 185, 186 and 187 of the Commercial Companies Law promulgated by Legislative Decree No. 28 of 1975.

    • Article 17

      Insurance companies and organisations subject to the provisions of this Law shall maintain a separate account for each of the insurance branches set forth in Article 4 of this Law.

    • Article 18

      The Minister for Commerce and Agriculture shall have the authority to exercise supervision and control over insurance companies and organisations subject to the provisions of this Law, and such exercise shall take place through the officers of his Ministry designated for this specific purpose. The said officers shall have the authority to ascertain compliance by insurance companies and organisations with the provisions of this Law and the orders issued for the implementation thereof. For this purpose, they may have access to the offices of such companies and organisation, examine the relevant books, approach banks and any other agency/institution wherein are maintained funds or investments for these companies and organisations. The officers of the Ministry shall submit their report to this respect to the Minister to the Minister to take the appropriate action according to the provisions of the Law and its Implementing Orders.

    • Article 19

      The Minister for Commerce and Agriculture shall be empowered to direct insurance companies and organisations to the areas where the reserves provided for in Articles 12, 13, 14 and 15 of this Law shall be invested.

    • Article 20

      Insurance companies and organisations subject to the provisions of this Law shall maintain books and records wherein shall be entered the insurance policies issued by the Company together with the details of the names and addresses of policy holder, date of concluding each policy and the applicable rates and terms. There shall be recorded in these books and records every alteration or amendment occurring to the aforesaid policies.

      The Minister for Commerce and Agriculture may issue an order compelling insurance companies and organisations to enter in the said books and records any particulars he deems fit for the proper exercise of his authority relating to control and supervision.

      In addition, the Minister for Commerce and Agriculture may by an order exempt any company or organisation having computerised operations from maintaining the books and records hereinabove referred to.

    • Article 21

      Insurance companies and organisations subject to the provisions of this Law shall maintain with a national bank a cash deposit to the order of the Minister for Commerce and Agriculture. Such deposit shall not be disposed of except by an order of the Minister.

      An order to be issued by the Minister for Commerce and Agriculture shall determine the amount of such deposit and the national banks wherein it may be deposited.

    • Article 22

      Each insurance company or organisation wishing to terminate its business activities in Bahrain in one branch or more of the insurance branches, shall file an application with the Minister for Commerce and Agriculture and the said application shall be accompanied by the following statements:

      (a) A statement proving that the relevant insurance company or organisation has fully been discharged with respect to its obligations arising from the insurance policies concluded in Bahrain or that it has transferred its policies in accordance with Article 9 of this Law to another insurance company licensed to operate in Bahrain.
      (b) A statement proving that the relevant insurance company or organisation has published advertisement in two daily newspaper of which one is published in English in Bahrain. This advertisement shall state that the insurance company or organisation intends to submit an application for the termination of its business activities in one branch or several insurance branches and that policy holders, beneficiaries and concerned parties may lodge their objections to its application with the Minister within a maximum period of three months from the date of publishing the most recent advertisement.

    • Article 23

      In case of lodging an objection to the application filled by an insurance company or organisation within the time limit indicated in the preceding Article 22, a decision shall not be adopted with respect to the application for termination of business activities except after reaching an agreement for passing a final judgement with respect to the objection.

    • Article 24

      The Minister for Commerce and Agriculture may withdraw the licence of any insurance company or organisation for engaging in any branch of insurance in the following events :

      (a) If the company or organisation ceases to carry on its business activities in accordance with the provisions of Article 22 and 23 of this Law or if the insurance activities in any insurance branch falls below the limit determined by an order of the Minister for Commerce and Agriculture or if the business activities in any insurance branch does not reach such limit.
      (b) If a court judgement has been passed adjudicating the company's bankruptcy.
      (c) If an insurance company or organisation fails to set aside the reserves provided for in this Law or if it abstains from investing them in the areas directed by the Minister for Commerce and Agriculture in accordance with Article 19 of this Law.
      (d) If a company abstains from implementing a final court judgement passed by one of the Bahrain Law courts.
      (e) If the paid-up capital falls below the minimum prescribed in accordance with the Law.
      (f) If a company or organisation prevents the officers of the Ministry of Commerce and Agriculture designated by the Minister in accordance with Article 18 of this Law from carrying out their duties.
      (g) If a company or organisation abstains from implementing the provisions of Articles 10 or 20 of this Law.
      (h) If it is proved from the result of inspection and examination that the rights of the insured, beneficiaries or third parties are likely to be lost or that the company or organisation concerned is in a state of insolvency rendering it unable to fulfil its obligations.

    • Article 25

      An insurance company or organisation shall be given notice of the Minister's decision for the withdrawal of its business or licence for the branch of insurance by a registered letter, and it shall implement the Minister's decision, otherwise a liquidator shall be appointed to whom shall be sent all legal claims.

      An insurance company or organisation may file an appeal with the Minister against his decision with respect to withdrawal of the licence. Such appeal shall be subject to the provisions of Article 8 of this Law with respect to the time limits thereof as well as the time limit and manner of contesting the Minister's decision for rejection of the appeal before the High Civil Court in addition to the provisions of this Article concerning the continuation of the concerned insurance company or organisation to carry on the business pending the resolution of the appeal or the final contestation.