Executive Summary

Legal Basis

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.

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.

GR-A.2.3

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

GR-A.2.3

This Module supersedes various articles contained in Ministerial Order No. 6 of 1990 regarding the issue of regulations for implementing legislative decree No. 17 of 1987 with respect to insurance companies and organisations. The specific articles in the Ministerial Order that have been cancelled by this Module are listed below:

GR-A.2.4

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

GR-B.1.1

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

GR-1.1.1

The requirements in Chapter GR-1 apply in full to Bahraini insurance licensees. The requirements in Chapter GR-1 also apply to overseas insurance licensees, 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 licensees 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 customers. These records must be retained for at least 10 years according to Article 60 of the CBB Law.

GR-1.1.3

For those insurance firms 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 business. The transactions relating to each kind of business must be maintained separately. The insurance firm must maintain such accounting and other records as necessary to identify all assets and liabilities in respect of each kind of business.

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.

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.

GR-1.1.5

For captive insurers, the maintenance of books and records may be carried out by an insurance manager. Should this be the case, the captive insurer 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 insurer.

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.

GR-1.1.7

Where older records have been archived, or in the case of records relating to overseas branches of Bahraini insurance licensees, 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 licensees, as well as Bahraini insurance licensees, where elements of record retention and management have been centralised in another group company, whether inside or outside of Bahrain.

Customer Records

Transaction Records

Keeping of Separate Client Accounts

GR-1.3.1

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

GR-1.3.2

In the case of Bahraini insurance licensees, these requirements apply to the licensee as a whole, including any overseas branches. In the case of overseas insurance licensees, 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). Overseas insurance licensees are thus not required to hold copies of shareholders' and Directors' meetings, except where relevant to the branch's operations.

GR-2.1.1

Insurance licensees must obtain CBB’s prior written approval for any change in their legal name. Licensees must notify the CBB of any change in their corporate name at least one week prior to effecting the proposed change.

GR-2.1.2

GR-2.1.1 applies to overseas insurance licensees only with respect to their Bahrain branch.

GR-2.1.3

In approving a change in a legal 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 subsidiaries do not suggest those subsidiaries are in fact regulated.

GR-2.2.1

Any written communication, including stationery, business cards or other business documentation published by the licensee, or used by its employees (agents, representatives, financial advisers or introducers) must include a statement that the licensee 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 licensee. All licensees should comply with this requirement by 31st December 2014 at the latest.

GR-3.1.1

Bahraini insurance licensees, other than captive insurers, must obtain CBB’s prior approval for any proposed cash or stock dividend before any public announcements or the Annual General Meeting.

GR-3.1.1A

When submitting a request for CBB’s approval for proposed dividend, the request made by the insurance licensee must:

GR-3.1.1B

To comply with the requirements of Subparagraph GR-3.1.1A (d)(i), the insurance licensee should complete and submit to the CBB the relevant sections of the Insurance Firm Return (Form IFR) or Insurance Brokers Return (IBR) pertaining to the capital adequacy and solvency margin requirements.

GR-3.1.2

[This Paragraph has been deleted in January 2024].

GR-3.1.3

[This Paragraph has been deleted in January 2024].

GR-3.2.1

Overseas insurance licensee must comply with the following when repatriating of profits to Head Office:

GR-4.1.1

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

GR-4.1.2

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

GR-4.1.3

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

GR-4.1.4

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

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 licensee to another insurance licensee, so that the policyholders 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 licensee and the policyholders, particularly if the insurance licensee that is assuming the business is financially stronger than the insurance licensee transferring the business.

GR-4.1.4

A portfolio transfer is not the same as an insurance firm ceding (reinsuring) some or all of its policyholder liabilities to a reinsurer. Reinsurance creates an additional set of rights and obligations between the insurance firm and the reinsurer but does not change the insurance firm's obligations to its policyholders nor does it create any direct obligations (to each other) between the insurance firm's policyholders and the insurance firm's reinsurer.

GR-4.1.5

Where the proposed transfer involves a transfer of obligations under contracts of insurance in respect of risks situated inside the Kingdom of Bahrain, the transferee must be licensed to carry on insurance business in Bahrain.

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 customers 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 customers.

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:

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 insurer or to a business transfer entirely comprising reinsurance business, where all of the policyholders affected by the transfer have given their consent.

GR-4.2.3

Insurance licensees 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 policyholder is a policyholder 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's rights and obligations under the policy will or may be materially affected by the transfer.

GR-4.2.4

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

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 policyholder 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.

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 policyholder has a right to cancel the policy, and the conditions applicable to any such right.

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 policyholder interests. In all cases where requirements are imposed, the CBB shall state the reasons for doing so.

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:

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.

GR-4.4.2

[This Paragraph was deleted in January 2007].

GR-4.4.3

[This Paragraph was moved to Section GR-4.2 in 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 firm.

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.

GR-5.1.1

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

GR-5.1.1A

Licensees must not incur or otherwise have an exposure (either directly or indirectly) to their controllers, including subsidiaries and associated companies of such controllers.

GR-5.1.1B

For the purpose of Paragraph GR-5.1.1A, licensees that already have an exposure to controllers 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.

GR-5.1.2

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

GR-5.1.3

[This Paragraph was deleted in October 2015.]

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.

GR-5.1.4A

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

GR-5.1.4B

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

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:

GR-5.1.5

If, as a result of circumstances outside the Bahraini insurance licensee's 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 licensee must notify the CBB no later than 15 calendar days from the date on which those changes have occurred.

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 controller 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 controllers, contained under Section GR-5.3.

GR-5.1.6

An approval of controller 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.

GR-5.1.7

Bahraini insurance licensees must submit, within 3 months of their financial year-end, a report on their controllers. This report must identify all controllers 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).

GR-5.2.1

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

GR-5.2.2

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

GR-5.2.3

In addition to the provisions of this Chapter, listed companies and their controllers 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 licensees, Section GR-5.5 shall apply.

GR-5.2.4

For the avoidance of doubt, the management company of a captive insurer is not automatically a controller of the firm.

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 controllers in the licensees, or to the voting powers the controllers are entitled to in the licensees. 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 controller in accordance with the provisions of the Law including preventing the controller from exercising his voting right or transferring of shares.

GR-5.3.1

Bahraini insurance licensees must satisfy the CBB of the suitability of their proposed controllers.

GR-5.3.1A

[This Paragraph was deleted in October 2015.]

Natural Persons

Unregulated Legal Persons

Regulated Legal Persons

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 licensee 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.

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.

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.

Appeal Process

GR-5.5.1

In the case of overseas insurance licensees, 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's direct parent undertaking as soon as the branch becomes aware. The overseas insurance firm licensee must provide a copy of the relevant approval by the home supervisor of the parent. The CBB will take the appropriate action in such case.

GR-5.5.2

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

GR-5.5.3

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

GR-5.5.4

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

GR-6.1.1

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

GR-6.1.2

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

GR-6.1.3

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

GR-6.1.4

Insurance licensees 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 firms, the report is included as part of the Insurance Firm Return (Form IFR (C) or IFR (T)). In the case of insurance brokers, the report is included as part of the the Insurance Broker Return (Form IBR).

GR-6.1.5

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

GR-6.2.1

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

GR-6.3.1

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

GR-7.1.1

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

GR-7.1.2

Insurance firms, except for captive insurers and insurance firms who are in run-off and whose license is restricted from entering into new contracts of insurance 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:

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

GR-7.1.4

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

GR-7.1.5

The cash deposit must be in the name of the insurance firm or insurance broker 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.

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 licensee must provide a valid reason for requesting the move to another retail bank.

GR-7.1.7

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

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

GR-7.2.2

In accordance with the Bahrain Commercial Companies Law, Bahraini insurance licensees 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.

GR-8.1.1

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

GR-8.1.2

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

GR-8.1.3

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

GR-8.1.4

Insurance licensees 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:

GR-8.1.5

Licensees 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 auditor 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 customers.

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 customers. 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.

GR-8.1.7

When the CBB has given its approval to an application to cease business, the licensee 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 licensee had entered into direct contracts of insurance relating to risks situated in a jurisdiction other than Bahrain, a notice must also be published in two national newspapers in the jurisdiction concerned.

GR-8.1.8

If the insurance licensee 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 insurance. The insurance licensee 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.

GR-8.1.9

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

GR-8.1.5

Once the insurance firm believes that it has discharged all its remaining contractual obligations to policyholders, it must publish a notice in two national newspapers in Bahrain approved by the BMA (one being in English and one in Arabic), stating that is has settled all its dues and wishes to leave the market. If the insurance firm had entered into direct contracts of insurance relating to risks situated in a jurisdiction other than Bahrain, a notice must also be published in two national newspapers in the jurisdiction concerned.

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.

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 licensee is leaving the market such notice will also provide for the surrender of the license and for the return of the insurance licensee's statutory deposit.

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.

GR-8.1.13

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

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 Directorate at the time of establishment, and submit confirmation of the cancellation of its commercial registration from the Ministry of Industry, Commerce and Tourism.

GR-9.1.1

Insurance firms must register its appointed representatives with the CBB in accordance with Chapter AU-1.3A. Insurance brokers and insurance consultants are not allowed to be appointed by insurance firms to act as appointed representatives nor are they allowed to appoint appointed representatives.

GR-9.1.2

An appointed representative may only represent one Takaful firm and one conventional insurance firm. An appointed representative may be a natural person, a CBB licensee or a commercial entity not licensed by the CBB who offers insurance products as a representative of a licensed insurance firm complementing the sale of its products and services.

GR-9.1.3

Insurance firms that appoint appointed representatives take full responsibility for the actions of their appointed representatives and must ensure the following:

GR-9.1.4

For purposes of Subparagraph GR-9.1.3 (a), the CBB recognises the following minimum or equivalent (as agreed with the CBB) qualifications for appointed representatives:

GR-9.1.5

Paragraph GR-9.1.3 (a) does not apply to appointed representatives who offer insurance products as a representative of a licensed insurance firm complementary to the sale of its products and services, e.g. travel agents, car dealers and retailers of goods. In such cases, licensees’ arrangements with appointed representatives should include alternative training needs.

GR-9.1.6

Insurance firms must ensure that appointed representatives that are natural persons must not receive premiums/contributions directly from policyholders, and the amounts must be paid directly to the insurance firms. Appointed representatives, other than natural persons must remit the premiums/contributions received no later than (15) calendar days from the date of the receipt of such amounts.

GR-10.1.1

Insurance brokers and insurance consultants 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 brokers and insurance consultants must provide, upon request, evidence to the CBB of the coverage in force.

GR-10.1.1A

In accordance with Paragraph EN-B.3.1, insurance licensees 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.

GR-10.1.2

The requirements for professional indemnity coverage will normally be met by the insurance broker or insurance consultant obtaining an insurance policy from an insurance firm. However, upon written application to the CBB, coverage may be met by the insurance broker or insurance consultant 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.

GR-10.1.3

The minimum limit of indemnity is BD 100,000 for insurance brokers and BD 75,000 for insurance consultants.

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 brokers or insurance consultants 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 parent company, separate professional indemnity cover will need to be provided.

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.

GR-10.1.8

If an insurance broker or insurance consultant 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.

GR-10.1.9

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

GR-10.1.10

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

GR-10.1.11

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

GR-10.1.12

Insurance brokers and insurance consultants 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.

GR-10.1.13

The above notice may be either issued by the insurance firm providing the coverage on behalf of the insurance licensee, 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.