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 for insurance licensees. In addition, it is the responsibility of Boards of insurance licensees to make their own assessment of the financial resources needed to meet their liabilities.

IM-3.1.2

Bahraini insurance brokers must maintain in their insurance brokerage business at all times the greater of:

There are no minimum capital and net asset requirements for overseas insurance brokers. However, for overseas 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.

IM-3.1.3

Insurance consultants and insurance 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 to insurance consultants and insurance managers. However, Principle 9 does apply and the CBB may suspend or revoke the license of any insurance consultant or insurance manager whom it reasonably considers does not possess financial resources commensurate with the scale and nature of its insurance consultancy or management activities.

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.

IM-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 or insurance firm, to its 'clients', namely insured members of the group.

IM-3.2.3

Other than a client who is an unincorporated entity with a turnover exceeding BD 1 million per year, an insurance intermediary must draw the client's attention to the status of the insurance firm — whether or not the insurance firm is locally licensed (as a Bahraini insurance firm or overseas insurance firm) and, if not, the reasons for recommending or choosing that insurance firm. In respect of these clients, this advice must be delivered in writing.

IM-3.2.4

Insurance intermediaries acting on behalf of customers 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.

IM-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.

IM-3.2.6

Licensees must have appropriate customer complaints handling procedures and systems for effective handling of complaints.

IM-3.2A.1

The Client Money Module outlines the requirements that insurance brokers have to meet with regards to holding client money for which they are responsible.

IM-3.2A.2

Where an insurance broker receives payment from a client, it must maintain one or more premiums/contributions account and held client money separate from its own money.

IM-3.2A.3

Insurance brokers must ensure that they maintain proper records, sufficient to show and explain their transactions and commitments in respect of their client money.

IM-3.2A.4

Unremitted insurance premiums held in the client money account and uncollected premiums from insureds must be recorded as fiduciary assets on the balance sheet of the insurance broker.

IM-3.2A.5

Insurance brokers must pay to insurance firms premiums/contributions received no later than 15 calendar days from the date of the receipt of such amounts.

IM-3.2A.6

For brokerage activities, insurance brokers are prohibited from collecting additional charges (other than the quoted premiums/contributions) from clients.

IM-3.2A.7

Brokerage charged by insurance brokers cannot exceed 15% of the premiums/contributions quoted by insurance firms for motor and medical classes of business of direct general insurance business.

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 to insurance brokers, except for the Sections dealing with market risk (RM-4.1) and insurance technical risk (RM-5.1). This Module does not apply to insurance consultants and insurance managers.

IM-3.3.2

The Module contains both:

IM-3.3.3

While the business of insurance managers is not subject to this Module, clients of insurance managers that are insurance firms, such as captive insurers, are subject to the requirements of this Module. The insurance 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.

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.

IM-3.4.2

Chapters FC-1 to FC-9 applies to insurance firms and insurance brokers. Where captive insurers are managed by an insurance manager, these Chapters are also to be applied to the insurance manager. This Module must be applied when dealing with new clients and when renewing policies or other insurance arrangements.

IM-3.4.3

Chapter FC-10 dealing with insurance fraud, applied to all insurance licensees.

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.

IM-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 an insurance manager are specifically exempted from appointing a MLRO, as the insurance manager must appoint one to perform these responsibilities for all firms under its management.

IM-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.

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.