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  • TA-2 TA-2 High Level Standards

    • TA-2.1 TA-2.1 Authorisation

      • TA-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. Insurance firms must restrict their business to insurance under their memorandum and articles of association.

        Rulebook Reference AU-A.1.3

      • TA-2.1.2

        An insurance firm's license will state the classes of insurance that the firm is authorised to conduct. An insurance firm, except for captive insurers, cannot undertake both general insurance and long-term insurance business. Insurance firms must operate on either conventional insurance principles or on takaful principles; they cannot combine the two.

        Rulebook Reference AU-A.1.1.14
        Amended: January 2007
        Amended: October 2007

      • TA-2.1.3

        All persons wishing to undertake a controlled function in an insurance licensee must be approved by the CBB prior to their appointment. Membership of a Shari'a Supervisory Board is a controlled function and requires CBB approval.

        Rulebook Reference AU-A.1.2
        Amended: January 2007

      • TA-2.1.4

        A captive insurer may also be licensed either as a takaful firm in which case it will appoint a Shari'a Supervisory Board and will operate in accordance with the principles of the Shari'a.

        Amended: January 2007

    • TA-2.2 TA-2.2 Principles of Business

      • TA-2.2.1

        There are 10 Principles of Business that apply to all insurance licensees including takaful and retakaful firms.

        Amended: January 2007

      • TA-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

      • TA-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.
        2. Taking all reasonable steps to identify, and prevent or manage, conflicts of interest that could harm the interests of a customer, and disclose fully all relevant information to customers, as required by the CBB's Regulations and Directives.
        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

    • TA-2.3 TA-2.3 High-Level Controls

      • TA-2.3.1

        In accordance with Principle of Business 10, insurance licensees 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 and apply to all takaful and retakaful firms.

        Rulebook Reference PB-1.10
        Amended: January 2007
        Amended: October 2007

      • TA-2.3.2

        Some of these Rules govern the establishment, composition, functions and responsibilities of Boards of Directors. All incorporated insurance licensees must have a Board, composed of a minimum of five Directors, which is ultimately accountable and responsible for the management and performance of the firm.

        Rulebook Reference HC-1
        HC-1.3.3
        Amended: April 2011
        Amended: January 2007
        Amended: October 2007

      • TA-2.3.3

        In addition to a Board of Directors, takaful and retakaful firms must also have in place a Shari'a Supervisory Board.

        Rulebook Reference HC-9.2.1
        Amended: April 2011
        Amended: January 2007

      • TA-2.3.4

        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. This must include:

        (a) The majority of Board meetings taking place in Bahrain;
        (b) Appointing a locally-resident Chief Executive or General Manager; and
        (c) Premises and records being located in the Kingdom of Bahrain.

        Rulebook Reference AU-2.2.1 and
        GR-1
        Amended: April 2011
        Amended: January 2007

      • TA-2.3.5

        The CBB requires Bahraini insurance licensees to establish an internal audit function to monitor the adequacy of their systems and controls.

        Rulebook Reference HC-6.5.1
        Amended: April 2011
        Amended: January 2007

      • TA-2.3.6

        All insurance licensees must designate an employee, of appropriate standing and resident in Bahrain, as Compliance Officer. The duties of the Compliance Officer include:

        (a) Having responsibility for oversight of the licensee's compliance with the requirements of the CBB; and
        (b) Reporting to the licensee's Board in respect of that responsibility.

        Rulebook Reference AU-1.2.11A
        Amended: April 2011
        Amended: January 2007
        Amended: October 2007

      • TA-2.3.7

        The Board must establish a remuneration committee of at least three directors which must:

        (a) Review the insurance licensee's remuneration policies for the approved persons, which must be approved by the shareholders;
        (b) Make recommendations regarding remuneration policies and amounts for approved persons to the whole Board, taking account of total remuneration including salaries, fees, expenses and employee benefits; and
        (c) Recommend Board member remuneration based on their attendance and performance.

        Rulebook Reference HC-5
        Amended: April 2011
        Amended: January 2007
        Amended: October 2007

      • TA-2.3.8

        An insurance licensee's Board must establish and disseminate to all employees and appointed representatives of the licensee a corporate code of conduct.

        Rulebook Reference HC-2.2.4
        Amended: April 2011
        Amended: October 2007

      • TA-2.3.9

        The Board must oversee the process of disclosure to all stakeholders. The Board must ensure that the licensee's communications are fair, transparent, comprehensive and timely.

        Rulebook Reference HC-8.2.2
        Amended: April 2011

      • TA-2.3.10

        The Board must assess, document and provide a written certification to the CBB each year detailing whether the internal corporate governance processes that it has implemented have successfully achieved their objectives, and consequently whether the Board has fulfilled its responsibilities for directing and monitoring the overall conduct of the licensee's affairs.

        Rulebook Reference HC-1.1.11
        Amended: April 2011
        Amended: January 2007

    • TA-2.4 TA-2.4 Auditors and Actuaries

      • TA-2.4.1

        All insurance firms 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: January 2007
        Amended: October 2007

      • TA-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

      • TA-2.4.3

        All insurance firms that conduct long-term insurance business (family takaful)must appoint an actuary that must provide an annual financial condition report (FCR).

        Rulebook Reference AA-4.1
        Amended: April 2014
        Amended: January 2007
        Amended: October 2007

      • TA-2.4.4

        Insurance firms that undertake general takaful business must commission an actuarial opinion from an actuary, every two years.

        Rulebook Reference AA-4.1
        Amended: April 2014
        Amended: October 2007

      • TA-2.4.4A

        Insurance firms can appoint a Registered Actuary or Signing Actuary to meet the CBB requirements.

        Rulebook Reference AA-4.2
        Adopted: October 2007

      • TA-2.4.5

        The CBB maintains on its website a list of Registered Actuaries that can practise in the Kingdom of Bahrain. A Registered Actuary must be independent of the insurance firm for which he is providing an actuarial evaluation and report.

        Rulebook Reference AU-1.3 and
        AA-4.2
        Amended: January 2007
        Amended: October 2007

      • TA-2.4.6

        A Signing Actuary is a Director or employee of the licensee concerned; he occupies a controlled function, and is subject to CBB approval as per Section AU-1.2.

        Rulebook Reference AA-4.2.11
        Adopted: October 2007

    • TA-2.5 TA-2.5 General Requirements

      • TA-2.5.1

        All insurance licensees 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

      • TA-2.5.2

        All insurance licensees must keep customer and transaction records in accordance with the requirement outlined in Section GR-1.2. Insurance licensees must also keep other records as required per Section GR-1.3.

        Rulebook Reference GR-1.2
        GR-1.3
        Amended: January 2007
        Amended: October 2007

      • TA-2.5.3

        Insurance licensees, other than captive insurers, must seek prior approval from the CBB for their corporate name and any trade names, and those of their subsidiaries located in Bahrain.

        Rulebook Reference GR-2.1
        Amended: January 2007
        Amended: October 2007

      • TA-2.5.4

        All Bahraini insurance licensees require CBB pre-approval for the distribution of dividends to shareholders.

        Rulebook Reference GR-3.1
        Amended: January 2007

      • TA-2.5.5

        An insurance firm must seek prior written approval from the CBB before executing a business transfer.

        Rulebook Reference GR-4.1
        Amended: January 2007
        Amended: October 2007

      • TA-2.5.6

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

        (a) A new controller;
        (b) An existing controller increasing its holding from below 20% to above 20%;
        (c) An existing controller increasing its holding from below 50% to above 50%; and
        (d) An existing controller reducing its holding from above 50% to below 50%.
        Rulebook Reference GR-5.1
        Amended: January 2007

      • TA-2.5.7

        All requirements dealing with close links apply in full to all insurance firms.

        Rulebook Reference GR-6

      • TA-2.5.8

        Insurance firms are required to maintain statutory deposits as per Article 181 of the CBB Law.

        Rulebook Reference GR-7.1
        Amended: January 2007

      • TA-2.5.9

        In accordance with the Bahrain Commercial Companies Law, insurance licensees are required to 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 50 per cent of the paid-up capital.

        Rulebook Reference GR-7.2
        Amended: January 2007

      • TA-2.5.10

        An insurance firm wishing to suspend its operations and liquidate its business must notify the CBB in writing, setting out whether it proposes to affect a transfer of its portfolio or go into run-off.

        Rulebook Reference GR-8
        Amended: January 2007