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  • IM-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 2007

      • IM-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-1.1.21
        Amended: July 2007
        Amended: October 2007

      • IM-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-1.4.13
        Amended: October 2007

      • IM-2.1.4

        The offering of insurance advice by insurance consultants refers to providing advice to a person in his capacity as agent for a policyholder or potential policyholder, on the merits of entering into a contract of insurance as principal or agent.

        Rulebook Reference AU-1.4.16
        Amended: January 2007
        Amended: October 2007

      • IM-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 an insurance firm.

        Rulebook Reference AU-1.4.20
        Amended: October 2007

      • IM-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 2007

      • IM-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 2007

      • IM-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 2007

      • IM-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 2007

      • IM-2.1.12

        insurance intermediaries and insurance 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 an insurance intermediary or insurance manager must be approved by the CBB prior to their appointment. (Approved Person).

        Rulebook Reference AU-1.2
        Amended: January 2007

      • IM-2.1.14

        Insurance intermediaries and insurance managers seeking an approved person authorisation for an individual, must satisfy the CBB that the individual concerned is fit and proper to undertake the controlled function.

        Rulebook Reference AU-3
        Amended: January 2007

    • IM-2.2 IM-2.2 Principles of Business

      • IM-2.2.1

        There are 10 Principles of Business that apply to all insurance licensees including insurance intermediaries and insurance managers.

        Amended: January 2007

      • IM-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 and approved persons should be honest and straightforward in their dealings with customers, and disclose fully all relevant information to customers, 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 a customer.
        3. Acting with due skill, care and diligence.
        4. Observing in full any obligations of confidentiality, including with respect to client 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 of customers.
        7. Paying due regard to the legitimate interests of customers and communicating with them in a fair and transparent manner and, when dealing with customers 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 2007

    • IM-2.3 IM-2.3 High Level Controls

      • IM-2.3.1

        In accordance with Principle of Business 10, insurance intermediaries and insurance 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 2007

      • IM-2.3.2

        Insurance brokers and insurance consultants operating as a Bahraini single person company are exempt from the requirements of Module HC.

        Rulebook Reference HC-B.1.1
        Amended: April 2011

      • IM-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 incorporated insurance intermediaries and insurance managers must have a Board, composed of a minimum of three Directors, 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 2007

      • IM-2.3.4

        Responsibility for the day-to-day management of an insurance intermediary and insurance manager is vested in the Chief Executive Officer, which is a controlled function. For insurance brokers, they should consider having in place an audit committee, but are not required to have in place Nominating and Remuneration Committees. Insurance consultants and insurance 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 2007

      • IM-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-1
        Amended: January 2007

      • IM-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 2007

      • IM-2.3.7

        Insurance intermediaries and insurance managers must nominate a Compliance Officer. In the case of insurance managers, they must also be designated as the Compliance Officer for the managed firms.

        Rulebook Reference HC-3.4
        Amended: October 2007

      • IM-2.3.8

        Chapter HC-10 contains guidance applicable to insurance consultants and insurance managers in respect of financial statement certification, appointment, training and evaluation of the Board, remuneration of approved persons, management structure, corporate ethics, communication between the Board and shareholders and corporate governance disclosure.

        Rulebook Reference HC-10
        Amended: April 2011

    • IM-2.4 IM-2.4 Auditors

      • IM-2.4.1

        Insurance intermediaries and insurance managers must have an annual external audit. Firms must obtain prior written approval from the CBB before appointing or re-appointing their auditor.

        Rulebook Reference AA-1.1.1
        Amended: October 2007

      • IM-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 2007

    • IM-2.5 IM-2.5 General Requirements

      • IM-2.5.1

        Insurance intermediaries and insurance 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 a captive insurer or another insurance firm, these records must be sufficient to allow an audit or an on-site examination by the CBB of the captive insurer or insurance firm.

        Rulebook Reference GR-1.1.4
        Amended: January 2007

      • IM-2.5.3

        An insurance broker must maintain separate client accounts separate from those used for its own funds.

        Rulebook Reference GR-1.2.9 to GR-1.2.12
        Amended: April 2012
        October 2007

      • IM-2.5.4

        Insurance intermediaries and insurance managers require prior approval from the CBB for their corporate name and any trade names.

        Rulebook Reference GR-2.1
        Amended: January 2007

      • IM-2.5.5

        Bahraini insurance intermediaries and Bahraini insurance managers require CBB pre-approval for the distribution of dividends to shareholders.

        Rulebook Reference GR-3.1
        Amended: January 2007

      • IM-2.5.6

        All requirements dealing with controllers apply in full to insurance intermediaries and insurance managers.

        Rulebook Reference GR-5

      • IM-2.5.7

        Requirements dealing with close links apply in full to insurance intermediaries and insurance managers. Annual reporting requirements of close links apply only to insurance firms and insurance brokers.

        Rulebook Reference GR-6
        Amended: April 2012

      • IM-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 2007

      • IM-2.5.9

        Insurance brokers and insurance consultants must maintain professional indemnity coverage in line with the requirements outlined in Chapter GR-10.

        Rulebook Reference GR-10