IM IM Insurance Intermediaries and Managers
IM-A IM-A Introduction
IM-A.1 IM-A.1 Purpose
Executive Summary
IM-A.1.1
This Module summarises the key aspects of requirements applicable to
insurance intermediaries andinsurance managers licensed in Bahrain, which are set out in full elsewhere in the different subject Modules of Volume 3 (Insurance). This Module is intended as an introductory guide to these Regulations and Directives, for potential license applicants,insurance brokers ,insurance consultants ,insurance managers and other interested parties. This Module only contains guidance material; in the event of discrepancy between this Module and the rules themselves, the latter will prevail.Amended: January 2007
Amended: October 2007IM-A.1.2
For the purposes of this Module, the following terms will apply:
Insurance Broker
As per Paragraph AU-1.4.10, the broking of insurance contracts means:
(a) Acting as an agent for anotherperson in relation to the buying of insurance for that otherperson ;(b) Making arrangements with a view to anotherperson , whether as principal or agent, buying insurance; or(c) Advising on insurance.Insurance Consultant
As per Paragraph AU-1.4.16, the offering of insurance advice (insurance consultant) means advising on insurance to third parties, without also acting as agent or making arrangements with a view to another
person buying insurance.Insurance Manager
As per Paragraph AU-1.4.20, the provision of insurance management services means the provision of management services to, or the exercising of managerial functions on behalf of, an
insurance firm . Aninsurance manager is appointed by aninsurance firm and is licensed in Bahrain to perform, under a contract of service, any managerial functions that are performed, or authority exercised, by aperson who is not aDirector nor anemployee of theinsurance firm , acting on the express or implied authority of its Board and/orGeneral Manager . 'Managerial functions' include, but are not limited to, the effecting ofcontracts of insurance and the issuing of instructions for the settlement of claims.Insurance Intermediary
For purposes of this Module, the term
insurance intermediary refers toinsurance brokers andinsurance consultants .Amended: January 2007
Amended: October 2007Legal Basis
IM-A.1.3
This Module contains the Central Bank of Bahrain's (CBB) Directive (as amended from time to time) relating to
insurance intermediaries andinsurance managers 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'). The Directive in this Module is applicable toinsurance licensees (including theirapproved persons ).Amended: January 2011
Amended: October 2007
Adopted: January 2007
IM-A.1.4
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
Adopted: January 2007IM-A.2 IM-A.2 Module History
IM-A.2.1
This Sector Guide 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 date in which the change was made. Chapter UG-3 provides further details on Rulebook maintenance and version control.
Amended: January 2007IM-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.
Amended: January 2007IM-A.2.3
A list of recent changes made to this module are detailed in the table below:
Module Ref. Change Date Description of Changes IM-1.2 01/07/05 Corrected that only insurance consultants and insurance managers are exempt from statutory deposits. IM-2.5 01/07/05 Corrected that insurance brokers are subject to statutory deposits. IM-3.4 01/07/05 Clarified scope of application of Decree Law No. 4. IM-2.1 01/10/05 Added the option for insurance manager to operate as a branch resident in Bahrain of a company incorporated in another jurisdiction. IM-3.4 01/10/05 Updated cross-references to Module FC. IM-A.1.3 01/2007 Updated to reflect new CBB Law and new Rule IM-A.1.3 introduced categorising this Module as a Directive. IM-2.3.3 10/2007 Amended the minimum number of Directors required to three as per amendment to Module HC. IM-2.1.7 and 2.1.8 04/2010 Amended legal status of insurance broker and insurance consultant to be in line with amendments made to Module AU. IM-A.1.3 01/2011 Clarified legal basis IM-1.2.1 and IM-2.3 04/2011 Amended to reflect changes to Module HC. IM-1.2.1 04/2012 Added summary of newly released Module CL (Client Money). IM-2.5.7 04/2012 Updated requirements for report on close links. IM-3.1.2 04/2012 Updated capital requirements for insurance brokers. IM-3.2.6 04/2012 Added requirement to have customer complaints handling procedures. IM-3.2A 04/2012 Added Section to deal with newly released Module CL (Client Money). IM-4.1 04/2012 Deleted reference to IMR and added new reference to Insurance broker return (Form IBR). Also added new requirement for agreed upon procedures related to compliance with Module CL. IM-A.2.4
Guidance on the implementation and transition to Volume 3 (Insurance) is given in Module ES (Executive Summary).
Amended: January 2007IM-1 IM-1 Overview
IM-1.1 IM-1.1 Insurance Intermediaries and Managers in Bahrain
IM-1.1.1
The functions of
insurance broker andinsurance consultant were in existence under the former Bahraini insurance law. The function ofinsurance manager as a regulated activity has been introduced with Volume 3 of the Rulebook.Amended: October 2007IM-1.1.2
The CBB has introduced a regulatory regime aimed at
captive insurers — Module CI. In most cases,captive insurers sub-contract their day-to-day management to a professional management firm. The licensing ofinsurance managers will simplify the licensing requirements ofcaptive insurers , as the parties with whom thecaptive insurer may sub-contract its management will have been considered in detail by the CBB's licensing requirements.Amended: January 2007IM-1.1.3
In accordance with the CBB's definition, the activities of
insurance managers are not limited to acting on behalf ofcaptive insurers but may also relate to non-captive insurance firms, both conventional and takaful.Amended: January 2007IM-1.2 IM-1.2 Structure of this Guidance
IM-1.2.1
The following table lists the Modules of the CBB Insurance Rulebook and indicates those that apply to
insurance brokers ,insurance consultants andinsurance managers . The remaining chapters of this guide will describe in more detail the principal requirements of each Module of the Regulations and Directives that apply toinsurance intermediaries andinsurance managers .HIGH LEVEL STANDARDS
Module AU (Authorisation) Regulations and Directives dealing with the licensing requirements and conditions for providers of regulated insurance services . The Sections dealing with the authorisation requirements, licensing conditions,approved persons conditions and information requirements and processes are applicable toinsurance intermediaries andinsurance managers .Module PB (Principles of Business) Principles that are applicable to all insurance licensees regulated in Bahrain; these apply in full toinsurance intermediaries andinsurance managers .Module HC (High-Level Controls) Directives in respect of governance, systems and controls of licensees. Different Rules and Guidance apply depending on the type of insurance intermediaries andinsurance managers .Module AA (Auditors and Actuaries) Directives on the appointment and functions of external auditors andactuaries ofinsurance licensees . Only those Directives dealing withauditors apply toinsurance intermediaries andinsurance managers .Module GR (General Requirements) Regulations and Directives dealing with requirements covering other areas not included in other Modules. These include: books and records, corporate and trade names, dividends, business transfers, controllers ,close links , statutory deposits, cessation of business and professional indemnity coverage. Statutory cash deposits are required forinsurance brokers .
BUSINESS STANDARDS
Module CA (Capital Adequacy) Directives governing minimum capital and solvency requirements and the valuation of assets and liabilities. Some of these Directives apply specifically to insurance intermediaries andinsurance managers . Considering the nature of their business, the requirements for capital and solvency forinsurance firms are far more detailed than forinsurance intermediaries andinsurance managers .Module BC (Business Conduct) The Code of Business Conduct governs the sale of insurance and applies to all insurance licensees .Module CL (Client Money) Directives applicable to insurance brokers andappointed representatives dealing with the holding ofclient money .Module RM (Risk Management) Risk management standards applicable to licensees. Several of the requirements for risk management can be outsourced to insurance managers .Module FC (Financial Crime) Directives governing the monitoring and reporting of financial crime, including the prevention of money laundering and terrorism financing and insurance fraud. Module TC (Training & Competency) Directives to be developed will apply to insurance intermediaries andinsurance managers .
REPORTING REQUIREMENTS
Module BR (CBB Reporting) Requirements for reporting to the CBB. Annual reporting requirements apply to insurance intermediaries andinsurance managers .Insurance intermediaries andinsurance managers are exempted from group and quarterly reporting requirements.Module PD (Public Disclosure) Module PD does not apply to insurance brokers ,insurance consultants andinsurance managers .
ENFORCEMENT AND REDRESS
Module EN (Enforcement) This Module outlines enforcement powers and processes that may be applied by the CBB and applies in full to all insurance licensees .Module DP (Dispute Resolution) Directives will be developed later. Module CP (Compensation) Directives will be developed later. Amended: April 2012
Amended: April 2011
Amended: January 2007
Amended: October 2007IM-2 IM-2 High Level Standards
IM-2.1 IM-2.1 Authorisation
IM-2.1.1
An entity in Bahrain must be authorised if it wishes to conduct
regulated insurance services , including effecting insurance contracts, the broking of insurance contracts, the offering of advice to third parties and the provision of insurance management services.Rulebook Reference AU-A.1.2 Amended: October 2007IM-2.1.2
An
insurance intermediary may be licensed for several types of business, including general insurance, unit linked long-term insurance, long-term insurance (other than unit-linked business), reinsurance and takaful products.Rulebook Reference AU-1.1.16,
AU-1.1.18,
AU-1.1.19 and
AU-1.1.21Amended: July 2007
Amended: October 2007IM-2.1.3
The broking of insurance contracts refers to advising on insurance, acting as agent for another person in relation to the buying of insurance for that other person or making arrangements with a view to another person, whether as principal or agent, buying insurance. A person does not carry on the broking of insurance contracts if he falls under the definition of
exempt introducer .Rulebook Reference AU-1.4.10 and
AU-1.4.13Amended: October 2007IM-2.1.4
The offering of insurance advice by
insurance consultants refers to providing advice to a person in his capacity as agent for apolicyholder or potentialpolicyholder , on the merits of entering into acontract of insurance as principal or agent.Rulebook Reference AU-1.4.16 Amended: January 2007
Amended: October 2007IM-2.1.5
The provision of insurance management services by
insurance managers refers to the provision of management services or exercising the managerial functions on behalf of aninsurance firm .Rulebook Reference AU-1.4.20 Amended: October 2007IM-2.1.6
Licensees who were carrying out activities that fall within the definition of the regulated activity of
insurance broker prior to 1 April 2005 may be unincorporated entities or natural persons and may continue as such until 31 December 2006.Rulebook Reference AU-2.1.7 IM-2.1.7
New applicants for licensing as
insurance brokers , after 1 April 2005 must be:(i) A Bahraini joint stock company (BSC);(ii) A Bahraini company with limited liability ('WLL');(iii) A branch resident in Bahrain of a company incorporated under the laws of its territory of incorporation and (where local regulation so requires) authorised as an insurance or reinsurance intermediary in that territory, and licensed to conduct insurance business in Bahrain prior to 1st April 2009;(iv) A Bahraini exempt company (E.C.) which was incorporated and licensed to conduct insurance business prior to 1st January 2005; or(v) A Bahraini single person company which was incorporated and licensed to conduct insurance business prior to 1st April 2009..
Rulebook Reference AU-2.1.8
Amended: April 2010
Amended: January 2007IM-2.1.8
For
insurance consultants , the legal status must be:(i) A sole proprietorship registered with the Ministry of Commerce;(ii) A Bahraini single person company;(iii) A Bahraini joint stock company (BSC);(iv) A Bahraini company with limited liability ('WLL'); or(v) A Bahraini exempt company (E.C.) which was incorporated and licensed to conduct insurance business prior to 1st January 2005.
Rulebook Reference AU-2.1.11
Amended: April 2010
Amended: January 2007IM-2.1.9
Insurance intermediaries applying for a license must do so in the form prescribed by the CBB and such application must include inter alia, details of proposed professional indemnity coverage.Rulebook Reference AU-1.1.6 Amended: January 2007IM-2.1.10
An
insurance broker's business activity must be restricted by its Memorandum and Articles of Association to insurance broking.Rulebook Reference AU-2.1.10 IM-2.1.11
For
insurance managers , the legal status must be:(i) A Bahraini joint stock company (BSC);(ii) A Bahraini company with limited liability ('WLL'); or(iii) A branch resident in Bahrain of a company incorporated under the laws of its territory of incorporation and (where local regulation so requires) authorised as an insurance or reinsurance intermediary in that territory.Rulebook Reference AU-2.1.12 Amended: January 2007IM-2.1.12
insurance intermediaries andinsurance managers with their Registered Office in the Kingdom of Bahrain must maintain their Head Office in the Kingdom.Overseas insurance licensees must maintain a local management presence and premises in the Kingdom appropriate to the nature and scale of their activities.Rulebook Reference AU-2.2.1 IM-2.1.13
All persons wishing to undertake a
controlled function in aninsurance intermediary orinsurance manager must be approved by the CBB prior to their appointment. (Approved Person ).Rulebook Reference AU-1.2 Amended: January 2007IM-2.1.14
Insurance intermediaries andinsurance managers seeking anapproved person authorisation for an individual, must satisfy the CBB that the individual concerned is fit and proper to undertake thecontrolled function .Rulebook Reference AU-3 Amended: January 2007IM-2.2 IM-2.2 Principles of Business
IM-2.2.1
There are 10 Principles of Business that apply to all
insurance licensees includinginsurance intermediaries andinsurance managers .Amended: January 2007IM-2.2.2
Non compliance with the Principles of Business can lead to enforcement action, which can include the calling into question of whether the firm or its management continue to meet the fitness and propriety criteria for approval.
Rulebook Reference PB-B.2.1 IM-2.2.3
The Principles of Business are:
1. Observing high standards of integrity and fair dealing.Insurance licensees andapproved persons should be honest and straightforward in their dealings withcustomers , and disclose fully all relevant information tocustomers , as required by the CBB's Regulations and Directives.2. Taking all reasonable steps to identify, and prevent or manage, conflicts of interest that could harm the interests of acustomer .3. Acting with due skill, care and diligence.4. Observing in full any obligations of confidentiality, including with respect toclient information. This requirement does not over-ride lawful disclosures.5. Observing proper standards of market conduct, and avoiding action that would generally be viewed as improper.6. Taking reasonable care to safeguard the assets ofcustomers .7. Paying due regard to the legitimate interests ofcustomers and communicating with them in a fair and transparent manner and, when dealing withcustomers who are entitled to rely on advice or discretionary decisions, taking reasonable care to ensure the suitability of such advice or decisions.8. Maintaining an open and co-operative relationship with the CBB and other competent regulatory bodies and taking reasonable care to ensure that activities comply with all applicable laws and Regulations.9. Maintaining adequate resources, whether human, financial or otherwise, sufficient to run the business in an orderly manner.10. Taking reasonable care to ensure that affairs are managed effectively and responsibly, with appropriate management, and systems and controls in relation to the size and complexity of operations.Rulebook Reference PB-1 Amended: January 2007
Amended: October 2007IM-2.3 IM-2.3 High Level Controls
IM-2.3.1
In accordance with Principle of Business 10,
insurance intermediaries andinsurance managers must put in place effective management, systems and controls for their business. The High-Level Controls Module sets out the Directives that put this principle into practice.Rulebook Reference PB-1.10 Amended: January 2007
Amended: October 2007IM-2.3.2
Insurance brokers andinsurance consultants operating as a Bahraini single person company are exempt from the requirements of Module HC.Rulebook Reference HC-B.1.1 Amended: April 2011IM-2.3.3
Some of these Rules govern the establishment, composition, functions and responsibilities of Boards of
Directors . Except for Bahraini single person companies, all incorporatedinsurance intermediaries andinsurance managers must have a Board, composed of a minimum of threeDirectors , which is ultimately accountable and responsible for the management and performance of the firm, in line with the Commercial Companies Law of 2001.Amended: April 2011
Amended: January 2007
Amended: October 2007IM-2.3.4
Responsibility for the day-to-day management of an
insurance intermediary andinsurance manager is vested in theChief Executive Officer , which is acontrolled function . Forinsurance brokers , they should consider having in place an audit committee, but are not required to have in place Nominating and Remuneration Committees.Insurance consultants andinsurance managers are not required to consider the need to operate Committees.Rulebook Reference AU-1.2.9, HC-B.1.2, HC-3.2 and HC-3.3 Amended: April 2011
Amended: January 2007
Amended: October 2007IM-2.3.5
The CBB expects, for
Bahraini insurance licensees , for Bahrain to be the principal place of business and for Bahrain to be the centre of its governance and management.Rulebook Reference HC-1.3.5
AU-2.2.1 and
GR-1Amended: January 2007IM-2.3.6
The CBB requires all
insurance brokers to establish an internal audit function to monitor the adequacy of their systems and controls.Rulebook Reference HC-6.5 Amended: April 2011
Amended: January 2007IM-2.3.7
Insurance intermediaries andinsurance managers must nominate a Compliance Officer. In the case ofinsurance managers , they must also be designated as the Compliance Officer for the managed firms.Rulebook Reference HC-3.4 Amended: October 2007IM-2.3.8
Chapter HC-10 contains guidance applicable to
insurance consultants andinsurance managers in respect of financial statement certification, appointment, training and evaluation of the Board, remuneration ofapproved persons , management structure, corporate ethics, communication between the Board and shareholders and corporate governance disclosure.Rulebook Reference HC-10 Amended: April 2011IM-2.4 IM-2.4 Auditors
IM-2.4.1
Insurance intermediaries andinsurance managers must have an annual external audit. Firms must obtain prior written approval from the CBB before appointing or re-appointing theirauditor .Rulebook Reference AA-1.1.1 Amended: October 2007IM-2.4.2
There are specific Rules and Guidance governing the duties and restrictions of external
auditors .Rulebook Reference AA-1 Amended: January 2007
Amended: October 2007IM-2.5 IM-2.5 General Requirements
IM-2.5.1
Insurance intermediaries andinsurance managers are expected to maintain books and records sufficient to produce financial statements and show a record of the business undertaken.Rulebook Reference GR-1.1 IM-2.5.2
Where an
insurance manager maintains the books and records of acaptive insurer or anotherinsurance firm , these records must be sufficient to allow an audit or an on-site examination by the CBB of thecaptive insurer orinsurance firm .Rulebook Reference GR-1.1.4 Amended: January 2007IM-2.5.3
An
insurance broker must maintain separateclient accounts separate from those used for its own funds.Rulebook Reference GR-1.2.9 to GR-1.2.12 Amended: April 2012
October 2007IM-2.5.4
Insurance intermediaries andinsurance managers require prior approval from the CBB for their corporate name and any trade names.Rulebook Reference GR-2.1 Amended: January 2007IM-2.5.5
Bahraini insurance intermediaries andBahraini insurance managers require CBB pre-approval for the distribution of dividends toshareholders .Rulebook Reference GR-3.1 Amended: January 2007IM-2.5.6
All requirements dealing with
controllers apply in full toinsurance intermediaries andinsurance managers .Rulebook Reference GR-5 IM-2.5.7
Requirements dealing with
close links apply in full toinsurance intermediaries andinsurance managers . Annual reporting requirements of close links apply only toinsurance firms andinsurance brokers .Rulebook Reference GR-6 Amended: April 2012IM-2.5.8
Insurance brokers are required to maintain a statutory cash deposit with a retail bank licensed to do business in Bahrain.Rulebook Reference GR-7.1.4 Amended: January 2007
Amended: October 2007IM-3 IM-3 Business Standards
IM-3.1 IM-3.1 Capital Adequacy
IM-3.1.1
Principle 9 requires
insurance licensees to hold adequate financial resources for the needs of the business. The Capital Adequacy Module sets out in detail the minimum financial resources requirements forinsurance licensees . In addition, it is the responsibility of Boards ofinsurance licensees to make their own assessment of the financial resources needed to meet their liabilities.Rulebook Reference PB-1.9 IM-3.1.2
Bahraini insurance brokers must maintain in their insurance brokerage business at all times the greater of:(a) A minimumnet assets value of BD 50,000;(b) 4% of fiduciary liabilities; or(c) 4% of annual income fromglobal insurance broking activities .There are no minimum capital and net asset requirements for
overseas insurance brokers . However, foroverseas insurance brokers , financial statements of the parent company must be submitted to the CBB for review, in order to assess the financial stability of the group on a global basis.Rulebook Reference CA-1.3 Amended: April 2012
Amended: October 2007
Amended: January 2007IM-3.1.3
Insurance consultants andinsurance managers must possess financial resources commensurate with the scale and nature of their insurance consultancy or management activities. There are no minimum capital and net assets requirements applicable toinsurance consultants andinsurance managers . However, Principle 9 does apply and the CBB may suspend or revoke the license of anyinsurance consultant orinsurance manager whom it reasonably considers does not possess financial resources commensurate with the scale and nature of its insurance consultancy or management activities.Rulebook Reference CA-1.4 Amended: January 2007IM-3.2 IM-3.2 Business Conduct
IM-3.2.1
The Business Conduct Module comprises general rules (BC-1) and a Code of Practice (BC-2). These rules apply in full to
insurance intermediaries . However, it should be noted that Module BC is principles-based.Rulebook Reference BC-A.1 Amended: January 2007IM-3.2.2
The CBB expects the
insurance manager to consider the requirements of the Code in relation to the service provided, on behalf of the captive orinsurance firm , to its 'clients', namely insured members of the group.Rulebook Reference BC-B.1.4 Amended: January 2007IM-3.2.3
Other than a
client who is an unincorporated entity with a turnover exceeding BD 1 million per year, aninsurance intermediary must draw theclient's attention to the status of theinsurance firm — whether or not theinsurance firm is locally licensed (as aBahraini insurance firm oroverseas insurance firm ) and, if not, the reasons for recommending or choosing thatinsurance firm . In respect of theseclients , this advice must be delivered in writing.Rulebook Reference BC-2.6.4 Amended: January 2007IM-3.2.4
Insurance intermediaries acting on behalf ofcustomers in arranging their insurance must, on request, disclose the amount of commission payable to them from the insurance premium, and any other remuneration received for arranging the insurance contract.Rulebook Reference BC-2.6.6 Amended: January 2007IM-3.2.5
Licensees must avoid conflicts of interest, or if conflicts are unavoidable, must explain the position fully and manage the situation so as to avoid prejudice to any party.
Rulebook Reference BC-2.13 IM-3.2.6
Licensees must have appropriate customer complaints handling procedures and systems for effective handling of complaints.
Rulebook Reference BC-4 Added: April 2012IM-3.2A IM-3.2A Client Money
IM-3.2A.1
The Client Money Module outlines the requirements that
insurance brokers have to meet with regards to holdingclient money for which they are responsible.Rulebook Reference CL-A.1 Added: April 2012IM-3.2A.2
Where an
insurance broker receives payment from a client, it must maintain one or more premiums/contributions account and heldclient money separate from its own money.Rulebook Reference CL-1.1.1 Added: April 2012IM-3.2A.3
Insurance brokers must ensure that they maintain proper records, sufficient to show and explain their transactions and commitments in respect of theirclient money .Rulebook Reference CL-1.2.1 Added: April 2012IM-3.2A.4
Unremitted insurance premiums held in the
client money account and uncollected premiums from insureds must be recorded asfiduciary assets on the balance sheet of theinsurance broker .
Rulebook Reference CL-1.3.4 Added: April 2012IM-3.2A.5
Insurance brokers must pay toinsurance firms premiums/contributions received no later than 15 calendar days from the date of the receipt of such amounts.
Rulebook Reference CL-2.3.3 Added: April 2012IM-3.2A.6
For brokerage activities,
insurance brokers are prohibited from collecting additional charges (other than the quoted premiums/contributions) from clients.
Rulebook Reference CL-2.3.5 Added: April 2012IM-3.2A.7
Brokerage charged by
insurance brokers cannot exceed 15% of the premiums/contributions quoted byinsurance firms for motor and medical classes of business of direct general insurance business.
Rulebook Reference CL-2.4.2 Added: April 2012IM-3.3 IM-3.3 Risk Management
IM-3.3.1
Principle 10 (IM-2.2.3) requires firms to have systems and controls that are adequate for their business. Consequently, the Risk Management Module of the CBB Rulebook contains Rules and Guidance on how, specifically,
insurance licensees should monitor and manage risk. This Module applies in full toinsurance brokers , except for the Sections dealing with market risk (RM-4.1) and insurance technical risk (RM-5.1). This Module does not apply toinsurance consultants andinsurance managers .Rulebook Reference PB-1.10 and
RM-B.1.1
RM-B.1.6Amended: January 2007
Amended: October 2007IM-3.3.2
The Module contains both:
• General requirements (on the overall management of risk); and• Specific requirements on the management of specific risk classes.Rulebook Reference RM-1
RM-2 to RM-8Amended: January 2007IM-3.3.3
While the business of
insurance managers is not subject to this Module, clients ofinsurance managers that areinsurance firms , such ascaptive insurers , are subject to the requirements of this Module. Theinsurance manager , in fulfilling its obligations to its clients, therefore needs to manage the affairs of its clients in accordance with the requirements of the Rulebook, including this Module.Rulebook Reference RM-B.1.7 Amended: January 2007IM-3.4 IM-3.4 Financial Crime
IM-3.4.1
The general law of Bahrain imposes obligations on individuals and firms in relation to the prevention and prohibition of the laundering of money. All
insurance licensees are subject to the statutory requirements of this Law.Rulebook Reference Decree Law No.4 IM-3.4.2
Chapters FC-1 to FC-9 applies to
insurance firms andinsurance brokers . Wherecaptive insurers are managed by aninsurance manager , these Chapters are also to be applied to theinsurance manager . This Module must be applied when dealing with newclients and when renewing policies or other insurance arrangements.Rulebook Reference FC-B.1.1 Amended: January 2007IM-3.4.3
Chapter FC-10 dealing with insurance fraud, applied to all
insurance licensees .Rulebook Reference FC-B.1.4 IM-3.4.4
Chapter FC-1 outlines the requirements for customer due diligence. In the case of
captive insurance firms it is expected that this identity will be apparent both from the ownership of the captive and the origin of insurance premiums from traceable bank accounts. In this case, no further verification will be needed as a matter of routine, although this does not exempt firms and individuals from reporting any transaction that they consider suspicious in nature.Rulebook Reference FC-1 Amended: January 2007IM-3.4.5
The reporting of suspicious transactions is the responsibility of the firm's Money Laundering Reporting Officer ('MLRO').
Captive insurance firms that are managed by aninsurance manager are specifically exempted from appointing a MLRO, as theinsurance manager must appoint one to perform these responsibilities for all firms under its management.Rulebook Reference FC-3.1.1 and
FC-3.1.2Amended: January 2007
Amended: October 2007IM-3.4.6
The MLRO will prepare an annual report on compliance with the anti-money laundering and combating terrorism financing controls and procedures. The Boards of captive firms will need to include the consideration of this report as a standing item for Board meetings each year.
Rulebook Reference FC-3.3 IM-3.4.7
Appendix FC-(iv), contained in Part B of the CBB Rulebook, provides guidance material and examples of transactions that would be considered suspicious for the purposes of this Directive.
Rulebook Reference Appendix FC-(iv) Amended: January 2007IM-4 IM-4 Reporting Requirements
IM-4.1 IM-4.1 CBB Reporting
IM-4.1.1
Insurance consultants andinsurance managers must submit to the CBB the audited financial statements for each financial year. They are exempted from quarterly reporting and from group financial reporting to the CBB.Rulebook Reference BR-1.2 Amended: April 2012
Amended: January 2007IM-4.1.1A
Insurance brokers must prepare and submit to the CBB an Insurance Broker Return (Form IBR) for each financial year, within 2 months of theinsurance broker's financial year end.Rulebook Reference BR-1.2A Added: April 2012IM-4.1.2
Details of the content of the Insurance Broker Return (Form IBR) can be found in BR-1.2A.6. The Return must be:
(a) Deposited with the CBB within 3 months of the year end;(b) Reviewed by the externalauditor based on agreed-upon procedures; and(c) Be accompanied by aDirectors' Certificate.
Rulebook Reference BR-1.2A.6
BR-1.2A.1
BR-1.2A.14
BR-1.2A.11Amended: April 2012
Amended: October 2007
Amended: January 2007IM-4.1.2A
Insurance brokers must submit to the CBB within 3 months from the financial year-end, a report as to the quality of theinsurance broker's procedures dealing with theinsurance broker's fiduciary assets/liabilities and compliance with Module CL (Client Assets)Rulebook Reference BR-1.5.4 Added: April 2012IM-4.1.3
Insurance intermediaries andinsurance managers must disclose to the CBB material information about changes in their situation including (but not limited to):(a) Significant breaches in Rules and other requirements;(b) Civil, criminal, and disciplinary procedures, fraud, errors and other irregularities;(c) Financial difficulties, breach of minimum solvency requirements, insolvency, bankruptcy, winding-up;(d) Changes inauditors andactuaries ;(e) Changes in address, legal status etc.; and(f) Changes incontrollers andclose links .Rulebook Reference BR-2.2.4
BR-2.2.6 to BR-2.2.8
BR-2.2.11
BR-2.3.29
BR-2.3.3
BR-2.3.7Amended: January 2007
Amended: October 2007IM-4.1.4
Insurance intermediaries andinsurance managers are required to maintain an open relationship with the supervisor and must permit representatives of the CBB, or persons appointed for the purpose by the CBB to have access, with or without notice, during reasonable business hours to any of their business premises in relation to the discharge of the CBB's functions under the relevant law. The CBB does have powers to request information and commission a report on the firm's business.Rulebook Reference BR-3.1
BR-3.2Amended: January 2007IM-4.2 IM-4.2 Public Disclosure
IM-4.2.1
The Public Disclosure Module of the CBB Rulebook does not apply to
insurance brokers ,insurance consultants andinsurance managers .Rulebook Reference PD-B.1.4 Amended: January 2007IM-5 IM-5 Enforcement and Redress
IM-5.1 IM-5.1 Enforcement
IM-5.1.1
The Enforcement Module of the CBB Rulebook applies in full to all
insurance licensees .Rulebook Reference Module EN Amended: January 2007