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  • Archived Part A

    • AU Authorisation

      • AU-5 Information Requirements and Processes

        • AU-5.2 AU-5.2 Approved Persons

          • AU-5.2.3 [This Paragraph was deleted in July 2015.]

            Deleted: July 2015
            Amended: July 2007

          • AU-5.2.4 [This Paragraph was moved to Paragraph AU-5.2.2B in July 2015.]

            Moved: July 2015
            Amended: July 2007

    • Business Standards

      • TC TC Training and Competency

        • TC-A TC-A Introduction

          • TC-A.1 TC-A.1 Purpose

            • Executive Summary

              • TC-A.1.1

                This Module provides Rules and Guidance to insurance licensees to ensure satisfactory levels of competence, in terms of an individual’s knowledge, skills, experience and professional qualifications. Insurance licensees are required to demonstrate that approved persons including individuals undertaking controlled functions are sufficiently competent and are able to undertake their respective roles and responsibilities. Insurance licensees must maintain the competence to provide regulated insurance services as outlined in Section AU-1.4. Individuals occupying controlled functions as outlined in Paragraph AU-1.2.2, must therefore meet minimum levels of training and experience related to their functions.

                Added: October 2020

              • TC-A.1.2

                The Rules build upon Principles 3 and 9 of the Principles of Business (see Module PB (Principles of Business). Principle 3 (Due Skill, Care and Diligence) requires insurance licensees and approved persons to observe high standards of integrity and fair dealing, and to be honest and straightforward in its dealings with clients. Principle 9 (Adequate Resources) requires insurance licensees to maintain adequate human, financial and other resources sufficient to run its business in an orderly manner.

                Added: October 2020

              • TC-A.1.3

                Condition 4 of the Central Bank of Bahrain’s (‘CBB’) Licensing Conditions (Chapter AU-2.4) and Chapter AU-3 (Approved Persons Conditions) of Module AU impose further requirements. To satisfy Condition 4 of the CBB’s Licensing Conditions, an insurance licensees staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of the licensee in a sound and prudent manner (AU-2.4). This condition specifies that insurance licensees must ensure their employees meet any training and competency requirements specified by the CBB. Chapter AU-3 (Approved Persons Conditions) of Module AU sets forth the ‘fit and proper’ requirements in relation to competence, experience and expertise required by approved persons; this Chapter specifies various factors that the CBB takes into account when reaching such a decision.

                Added: October 2020

            • Legal Basis

              • TC-A.1.4

                This Module contains the Central Bank of Bahrain’s (‘CBB’) Directive, as amended from time to time, relating to training and competency and is issued under the powers available to the CBB under Articles 38 and 65(b) of the Central Bank of Bahrain and Financial Institutions Law 2006 (‛CBB Law’). The Directive in this Module is applicable to all insurance licensees.

                Added: October 2020

              • TC-A.1.5

                For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.

                Added: October 2020

          • TC-A.2 TC-A.2 Module History

            • TC-A.2.1

              This Module was first issued in August 2020. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made. UG-3 provides further details on Rulebook maintenance and version control.

              Added: October 2020

            • TC-A.2.2

              A list of recent changes made to this Module is provided below:

              Module Ref. Change Date Description of Changes
                   
                   
                   
                   
                   

            • TC-A.2.3

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

              Added: October 2020

        • TC-B TC-B Scope of Application

          • TC-B.1 TC-B.1 Scope

            • TC-B.1.1

              This Module applies to all insurance licensees authorised in the Kingdom. It covers the training and competency requirements for approved persons (See Chapter TC-1).

              Added: October 2020

            • TC-B.1.2

              In the case of an overseas insurance licensee, the application of this Module is restricted to its Bahrain operations.

              Added: October 2020

            • TC-B.1.3

              Persons authorised by the CBB to undertake a controlled function prior to the issuance of Module TC do not need to reapply for authorisation.

              Added: October 2020

            • TC-B.1.4

              The requirements of this Module apply to approved persons in connection with the insurance licensees regulated insurance services, or under a contract of service.

              Added: October 2020

            • TC-B.1.5

              In the case of outsourcing arrangements, the insurance licensee should refer to the competency requirements, outlined in Appendix TC-1 for approved persons, for assessing the suitability of the outsourcing provider.

              Added: October 2020

            • TC-B.1.6

              Insurance licensees must satisfy the CBB that individuals undertaking a controlled function position for it or on its behalf are suitable and competent to carry on that position.

              Added: October 2020

            • TC-B.1.7

              In implementing this Module, insurance licensees must ensure that individuals appointed/recruited to perform controlled functions:

              (a) Hold suitable qualifications and experience appropriate to the nature of the business;
              (b) Remain competent for the work they do; and
              (c) Are appropriately supervised.
              Added: October 2020

        • TC-1 TC-1 Requirements for Controlled Functions

          • TC-1.1 TC-1.1 Controlled Functions

            • TC-1.1.1

              Individuals occupying controlled functions (refer to Section AU-1.2) in an insurance licensee must be qualified and suitably experienced for their specific roles and responsibilities. The approved persons are those of:

              (a) Board Member/ Director;
              (b) Chief Executive Officer or General Manager and their Deputies;
              (c) Chief Financial Officer and/or Head of Finance;
              (d) Compliance Officer;
              (e) Chief Risk Officer/ Head of Risk Management;
              (f) Head of Internal Audit;
              (g) Internal Shari’a Reviewer (where applicable);
              (h) Head of Underwriting;
              (i) Head of Claims;
              (j) Head of Sales and Marketing/Head of Business Development
              (k) Heads of other Functions (including IT and HR functions);
              (l) Money Laundering Reporting Officer/ Deputy Money Laundering Reporting Officer;
              (m) Unit-linked investment adviser (where applicable); and
              (n) Signing Actuary (where the function is undertaken by a Director or an employee of the insurance firm).
              Added: October 2020

            • TC-1.1.2

              An insurance licensee must take reasonable steps to ensure that individuals holding controlled functions are sufficiently knowledgeable about their respective fields of work to be able to guide and supervise operations that fall under their responsibilities. Competence must be assessed on the basis of experience and relevant qualifications described in Appendix TC-1 as a minimum. However, the CBB reserves the right to impose a higher level of qualifications as it deems necessary.

              Added: October 2020

            • Board Member/ Director

              • TC-1.1.3

                Board members/ Directors collectively are responsible for the business performance and strategy of the insurance licensee, as outlined in more details in Section HC-1.2.

                Added: October 2020

              • TC-1.1.4

                When taken as a whole, the board of directors of an insurance licensee must be able to demonstrate that it has the necessary skills and expertise, as outlined in Paragraphs HC-1.2.4.

                Added: October 2020

            • Chief Executive Officer or General Manager and their Deputies

              • TC-1.1.5

                The Chief Executive Officer or General Manager and their deputies (as appropriate) is responsible for the executive management and performance of the insurance licensee within the framework or delegated authorities set by the Board, and is outlined in more details in Paragraph HC-6.3.4.

                Added: October 2020

            • Chief Financial Officer/ Head of Finance

              • TC-1.1.6

                The Chief Financial Officer/Head of Finance is responsible for directing the insurance licensee’s financial function, including ensuring that the relevant accounting treatment is applied to all of the activities of the insurance licensee in a timely manner. The scope of authority of the CFO/ Head of Finance is outlined in more detail in Subparagraph HC-6.3.2 (b).

                Added: October 2020

            • Compliance Officer

              • TC-1.1.7

                In accordance with Paragraph AU-1.2.11A, an employee of appropriate standing must be designated by insurance licensees for the position of compliance officer. The duties of the compliance officer, who must have Bahraini residency, 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.
                Added: October 2020

            • Chief Risk Officer/ Head of Risk Management

              • TC-1.1.8

                The Chief Risk Officer/ Head of Risk Management is responsible for the management and control of all risk exposures arising from the activities of the insurance licensee.

                Added: October 2020

            • Head of Internal Audit

              • TC-1.1.9

                The Head of Internal Audit is responsible for providing independent and objective review on the adequacy and effectiveness of the holistic internal control environment within the insurance licensee. The duties of the head of internal audit are outlined in more detail in Subparagraph HC-6.3.2 (d).

                Added: October 2020

            • Internal Shari’a Reviewer

              • TC-1.1.10

                The Internal Shari’a reviewer in an insurance licensee, dealing with Islamic products and services, is responsible for the examination of the extent of an insurance licensee compliance, in all its activities, with the Shari’a. This examination includes contracts, agreements, policies, products, transactions memorandum and articles of association, financial statements, reports (especially internal audit and central bank inspection), circulars etc. The objective of the internal Shari’a review is to ensure that the activities carried out by an insurance licensee do not contravene the Shari’a. This role is outlined in more detail in Paragraph AU-1.2.11B.

                Added: October 2020

            • Head of Underwriting

              • TC-1.1.11

                The Head of Underwriting function is involved in portfolio analysis and to manage the underwriting process such as risk assessment, pricing and negotiation with the broker or clients. The Head of Underwriting should ensure effective oversight and guidance of underwriting risk in line with the insurance licensees risk appetite and policies and procedures.

                Added: October 2020

            • Head of Claims

              • TC-1.1.12

                The Head of Claims function is responsible for directing and overseeing the operations of an insurance claims function to meet operational, financial and service requirements. The Head of Claims should ensure effective oversight and control of settlements in line with the insurance licensees risk appetite and policies and procedures. Moreover, the Head of Claims are involved in strategic processing and payment of claims and are often involved in sets policies on insurance claims.

                Added: October 2020

            • Head of Sales and Marketing/Head of Business Development

              • TC-1.1.13

                The Head of Sales and Marketing/Head of Business Development is responsible for implementing the corporate strategy; marketing, sales and public relations. He/ she is responsible for developing and overseeing the marketing campaigns, social media accounts, digital marketing channels and other marketing plans. He/ she ensures innovation in product design and developments and conduct behavioural and trend analysis. He/ she engages directly with customers and ensures services provided to customers are in line with insurance licensees policies and procedures and with industry best practices.

                Added: October 2020

            • Heads of other Functions

              • TC-1.1.14

                Heads of other functions are responsible for tracking specific functional performance goals in addition to identifying, managing, and reporting critical organisational issues upstream. Certain functions require dealing directly with customers while others do not. Both categories of functions, however, require specific qualifications and experience to meet the objectives as well as compliance requirements of the insurance licensee.

                Added: October 2020

              • TC-1.1.15

                For purposes of Paragraph TC-1.1.15, insurance licensees should contact the CBB should they require further clarification on whether a specific position falls under the definition of “Heads of other Functions”.

                Added: October 2020

            • Money Laundering Reporting Officer (MLRO) / Deputy Money Laundering Reporting Officer (DMLRO)

              • TC-1.1.16

                The attributes and responsibilities of the MLRO/ DMLRO are described more fully in Paragraphs FC-3.1.9 and FC-3.2.1.

                Added: October 2020

            • Unit-Linked Investment Adviser

              • TC-1.1.17

                A Unit-Linked Investment Adviser refers to the function of advising clients on contracts that are, by their nature, investment products, including, but not limited to pension and retirement products.

                Added: October 2020

            • Signing Actuary

              • TC-1.1.18

                A Signing Actuary is appointed to provide professional opinion and report on an insurance firm's actuarial evaluation; level of reserves that should be held in order to meet potential insurance liabilities. The signing actuary may be a Director or employee of the licensee and are accredited by an internationally recognised organisation.

                Added: October 2020

          • TC-1.2 TC-1.2 Continuous Professional Development Training (“CPD”)

            • CPD

              • TC-1.2.1

                All individuals holding controlled functions in an insurance licensee must undergo a minimum of 15 hours of CPD per annum.

                Added: October 2020

              • TC-1.2.2

                The insurance licensee must ensure that an approved person undertaking a controlled function is being supervised and undergoes appropriate review and assessment of performance.

                Added: October 2020

              • TC-1.2.3

                The level of supervision should be proportionate to the level of competence demonstrated by the approved person. Supervision will include, as appropriate:

                (a) Reviewing and assessing work on a regular basis; and
                (b) Coaching and assessing performance against the competencies necessary for the role.
                Added: October 2020

              • TC-1.2.4

                Supervisors of approved persons should have technical knowledge and relevant skills, e.g. coaching and assessment skills.

                Added: October 2020

        • TC-2 TC-2 General Requirements

          • TC-2.1 TC-2.1 Recruitment and Assessing Competence

            • Recruitment and Appointment

              • TC-2.1.1

                If an insurance licensee recruits or promotes an individual to undertake a controlled function, it must satisfy itself, where appropriate, of such individual’s relevant qualifications and experience.

                Added: October 2020

              • TC-2.1.2

                For purposes of Paragraph TC-2.1.1 insurance licensees must file Form 3 (Approved Persons) with the CBB and obtain the express written approval of the CBB for that person to occupy the desired position. In its application, the insurance licensee must demonstrate to the CBB that full consideration has been given to the qualifications and core competencies for controlled functions in Appendix TC-1 (See Article 65(b) of the CBB Law).

                Added: October 2020

              • TC-2.1.3

                Insurance licensees should refer to Module AU (Authorisation) providing detailed requirements on the appointment of individuals occupying controlled functions (approved persons).

                Added: October 2020

              • TC-2.1.4

                An insurance licensee proposing to recruit or appoint an individual has to satisfy itself, of his/her relevant qualifications and experience. The insurance licensee should:

                (a) Take into account the knowledge and skills required for the role, in addition to the nature and the level of complexity of the controlled function; and
                (b) Take reasonable steps to obtain sufficient information about the individual’s background, experience, training and qualification.
                Added: October 2020

            • Assessing Competence

              • TC-2.1.5

                Insurance licensees must not allow an individual to undertake or supervise controlled functions unless that individual has been assessed by the insurance licensee as competent in accordance with this Section.

                Added: October 2020

              • TC-2.1.6

                In determining an individual’s competence, insurance licensees may assess if the person is fit and proper in accordance with Chapter AU-3.

                Added: October 2020

              • TC-2.1.7

                Insurance licensees must assess individuals as competent when they have demonstrated the ability to apply the knowledge and skills required to perform a specific controlled function.

                Added: October 2020

              • TC-2.1.8

                The assessment of competence will be dependent on the nature and the level of complexity of the controlled functions. Such assessment of competence of new personnel may take into account the fact that an individual has been previously assessed as competent in a similar controlled functions.

                Added: October 2020

              • TC-2.1.9

                If an insurance licensee assesses an individual as competent in accordance with TC-2.1.7 to perform a specific controlled function, it does not necessarily mean that the individual is competent to undertake other controlled functions.

                Added: October 2020

              • TC-2.1.10

                An insurance licensee should use methods of assessment that are appropriate to the controlled functions as it relates to the individual’s role.

                Added: October 2020

          • TC-2.2 TC-2.2 Training and Maintaining Competence

            • TC-2.2.1

              An insurance licensee must annually determine the training needs of individuals undertaking controlled functions. It must develop a training plan to address these needs and ensure that training is planned, appropriately structured and evaluated.

              Added: October 2020

            • TC-2.2.2

              The assessment and training plan described in Paragraph TC-2.2.1 should be aimed at ensuring that the relevant controlled functions maintains competence in the position An individual can develop skills and gain experience in a variety of ways. These could include on the job learning, individual study, and other methods. In almost every situation, and for most individuals, it is likely that competence will be developed most effectively by a mixture of training methods.

              Added: October 2020

            • TC-2.2.3

              The training plan of insurance licensees must include a programme for continuous professional development training (“CPD”) for their controlled functions.

              Added: October 2020

            • TC-2.2.4

              Approved persons may choose to fulfil their CPD requirements by attending courses, workshops, conferences and seminars at local or foreign training institutions.

              Added: October 2020

            • TC-2.2.5

              The annual training required under Paragraph TC-2.2.1 must also include the quarterly updates, if any, to the CBB Volume 3 (Insurance) Rulebook, in areas relevant to each controlled function.

              Added: October 2020

            • TC-2.2.6

              Insurance licensees should maintain appropriate training records for each individual. Licensees should note how the relevant training relates to and supports the individual’s role. Training records may be reviewed during supervisory visits to assess the insurance licensees systems and to review how the licensee ensures that its staff are competent and remain competent for their roles.

              Added: October 2020

            • Maintaining Competence

              • TC-2.2.7

                An insurance licensee must make appropriate arrangements to ensure that controlled functions maintain competence.

                Added: October 2020

              • TC-2.2.8

                An insurance licensee should ensure that maintaining competence for an approved person takes into account:

                (a) Application of technical knowledge;
                (b) Application and development of skills; and
                (c) Any market changes and changes to products, legislation and regulation.
                Added: October 2020

              • TC-2.2.9

                An insurance licensee may utilise the CPD schemes of relevant professional bodies to demonstrate compliance with TC-2.2.1. In-house training, seminars, conferences, further qualifications, product presentations, computer-based training and one-to-one tuition may also be considered to demonstrate compliance with Paragraph TC-2.2.1.

                Added: October 2020

          • TC-2.3 TC-2.3 Transitional Period

            • TC-2.3.1

              The requirements of Module TC for insurance licensees are effective from the issuance date of this Module.

              Added: October 2020

            • TC-2.3.2

              New applications for approved persons are subject to the requirements of this Module (See Paragraph TC-B.1.4).

              Added: October 2020

            • TC-2.3.3

              Approved persons occupying controlled functions at the time this Module is issued will be grandfathered and not subject to the requirements of this Module, with the exception of CPD requirements in Paragraph TC-1.2.1. However, should the approved person move to another controlled function, Paragraph TC-2.3.4 will apply.

              Added: October 2020

            • TC-2.3.4

              In instances, where an approved person in one insurance licensee moves to another insurance licensee and occupies the same position, the CBB will exercise its discretion on whether to grandfather such approved person from the required qualifications and competencies outlined in Appendix TC-1 into the new insurance licensee. The grandfathering criteria used by the CBB will include a comparison of the scope and size of both positions. This will also apply in instances where an approved person in one insurance licensee moves from one department to another within the same insurance licensee.

              Added: October 2020

          • TC-2.4 TC-2.4 Record Keeping

            • TC-2.4.1

              An insurance licensee must make and retain updated records of:

              (a) The annual training plan for each controlled function;
              (b) Materials used to conduct in-house training courses;
              (c) List of participants attending such in-house training courses;
              (d) Results of evaluations conducted at the end of such training courses.
              (e) The criteria applied in assessing competence;
              (f) How and when the competence decision was arrived at; and
              (g) Record of CPD hours undertaken by each approved person.
              Added: October 2020

            • TC-2.4.2

              For purposes of Paragraph TC-2.4.1, the record keeping requirements apply to both current employees as well as to employees following termination of their services or employment with the insurance licensee, for a minimum period of five years.

              Added: October 2020

            • TC-2.4.3

              An insurance licensee must maintain records of its recruitment and appointment procedures for approved persons for a minimum period of five years following termination of their services or employment with the insurance licensee. Such procedures should be designed to adequately take into account proof of the candidates’ knowledge and skills and their previous activities and training.

              Added: October 2020

            • TC-2.4.4

              For purposes of Paragraph TC-2.4.3, the recruitment record keeping procedure should include, but is not limited to, the following:

              (a) Results of the initial screening;
              (b) Results of any employment tests;
              (c) Results and details of any interviews conducted;
              (d) Background and references checks; and
              (e) Details of any professional qualifications.
              Added: October 2020

        • Appendices Appendices

          • Appendix TC-1 Qualifications and Core Competencies

            Role Core Competencies How can competence be demonstrated?
            Board Member/ Director Board members should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Sufficient experience to demonstrate sound business decision-making;
            (c) Good understanding of the industry; and
            (d) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum experience of 7 years in business and/or government/quasi government of which at least 5 years at a senior management level; and
            (b) An academic degree from a university at bachelor level or higher and/or a relevant professional qualification.
            Chief Executive Officer or General Manager and their Deputies The Chief Executive Officer or General Manager and their Deputies should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Strong understanding of Insurance business and the wider industry;
            (c) Good understanding of the industry’s regulatory environment;
            (d) Relevant experience and qualifications associated with such executive responsibilities; and
            (e) The necessary professional and leadership capabilities which qualify him for this position.
            		 Competence could be demonstrated by:
            (a) A minimum experience of 10 years in the insurance industry of which at least 5 years is at a senior management level in the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to insurance, accounting or finance and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Advanced Diploma in Insurance (ACII), Chartered Insurance Institute (general and life insurance);
            (ii) Advanced Diploma in Financial Planning, Chartered Institute of Insurance (life insurance);
            (iii) Fellow, Life Management Institute (FLMI), Life Office Management Association (LOMA) (life insurance); and/or
            (iv) Fellowship (F.I.I.I), Insurance Institute of India (I.I.I)(general and life insurance).
            Chief Financial Officer/ Head of Finance The Chief Financial Officer/ Head of Finance should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Good understanding of Insurance business and the wider industry;
            (c) Strong understanding of the industry’s regulatory environment;
            (d) The relevant experience and qualifications to fulfil his responsibilities; and
            (e) Strong knowledge and understanding of international accounting standards and how they are applied in a business context, including IFRS.
            		 Competence could be demonstrated by:
            (a) A minimum of 10 years of practical experience in a finance function of which at least 5 years within the insurance industry. Experience of external audit within the insurance industry will also be considered as part of the minimum experience requirements; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to accounting or finance and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Affiliate, The Association of Chartered Certified Accountants (ACCA);
            (ii) Certified Public Accountant (CPA), The Association of International Certified Professional Accountants (AICPA);
            (iii) Associate Chartered Accountant (ACA), Institute of Chartered Accountants in England and Wales (ICAEW);
            (iv) Chartered Financial Analyst (CFA); and/or
            (v) Certified Islamic Professional Accountant (CIPA) from AAOIFI (For Takaful companies).
            Compliance Officer A Compliance Officer should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) An appropriate level of experience and standing to demonstrate suitable independence from other functions within the Insurance Licensee;
            (c) Good understanding of the industry; and
            (d) Strong understanding of the industry’s applicable regulatory requirements.
            		 Competence could be demonstrated by:
            (a) A minimum of 5 years of relevant experience in compliance in the insurance industry, financial institution or financial regulator;
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to accounting or finance and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Certified Insurance Supervisor (CIS) qualification, Bahrain Institute of Banking and Finance (BIBF); and/or
            (ii) International Diploma in Governance, Risk and Compliance, International Compliance Association (ICA).
            Chief Risk Officer/ Head of Risk Management The Chief Risk Officer/ Head of Risk Management should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) An appropriate level of experience and standing to demonstrate suitable independence from other functions within the insurance licensee;
            (c) Good understanding of insurance business and the wider industry;
            (d) Good understanding of the industry’s regulatory environment; and
            (e) The relevant experience and qualifications to fulfill his responsibilities.
            		 Competence could be demonstrated by:
            (a) A minimum of 7 years of practical experience in a financial institution of which at least 5 years in a risk management position within the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to actuary, accounting or finance and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Associate in Risk Management (ARM), The institutes;
            (ii) International Diploma in Risk Management, Institute of Risk Management qualifications (IRM);
            (iii) Financial Risk Manager (FRM), Global Association of Risk Professionals (GARP); and/or
            (iv) Professional Risk Manager (PRM), Professional Risk Managers’ International Association (PRIMA).
            Head of Internal Audit The Head of Internal Audit should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) An appropriate level of experience and standing to demonstrate suitable independence from other functions within the insurance licensee;
            (c) Good understanding of insurance business and the wider industry;
            (d) Good understanding of the industry’s regulatory environment;
            (e) The relevant accounting and auditing experience and qualifications to fulfil his responsibilities; and
            (f) A demonstrable knowledge and understanding of the Standards for the Professional Practice of Internal Audit.
            		 Competence could be demonstrated by:
            (a) A minimum of 7 years of practical experience in a relevant role in financial institution. Experience of external audit within the insurance industry will also be considered as part of the minimum experience requirements; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to audit, accounting or finance and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Certified Internal Auditor (CIA), Institute of Internal Auditors (IIA);
            (ii) Affiliate, The Association of Chartered Certified Accountants (ACCA);
            (iii) Certified Public Accountant (CPA),
            (iv) The Association of International Certified Professional Accountants (AICPA);
            (v) Associate Chartered Accountant (ACA), Institute of Chartered Accountants in England and Wales (ICAEW).
            Internal Shari’a Reviewer The Internal Shari’a Reviewer should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Have the relevant accounting and auditing experience and qualifications to fulfil his/her responsibilities; and
            (c) Have appropriate level of knowledge in Shari’a rules and principles, AAOIFI Shari’a standards and Islamic finance.
            		 Competence could be demonstrated by:
            (a) A minimum of 5 years of experience as an Internal Shari’a audit function with an insurance licensee or financial institution dealing with Islamic products and services; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) and other relevant certification(s) specific to this role. Such professional qualifications may include but are not limited to:
            (i) Certified Islamic Professional Accountant (CIPA), Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI);
            (ii) BIBF Advanced Diploma in Islamic Commercial Jurisprudence (ADICJ);
            (iii) BIBF Advanced Diploma in Islamic Finance (ADIF); and/or
            (iv) Certified Shari’a Advisor & Auditor (CSAA), Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
            Head of Underwriting The Head of Underwriting should have:
            (a) A clear understanding of the role and responsibilities associated with this position; and
            (b) Strong understanding of the licensee’s business and the broader industry; and
            (c) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum of 7 years of practical experience in an underwriting or comparable function (underwriting/claims) within the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to underwriting and claims and other relevant certification(s) specific to this role. Such certifications may include but are not limited to Insurance Management Diploma, Bahrain Institute for Banking and Finance (BIBF) in combination with BIBF Professional Award for Certified Insurance Practitioner (BPACIP) and BIBF Professional Award for Specialist Insurance Practitioner (BPASIP).
            Head of Claims The Head of Claims should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Relevant claims management experience to ensure policyholder(s) receives fair and equitable settlement for their loss;
            (c) Relevant experience in dealing with customers in a professional manner;
            (d) Strong understanding of the licensee’s business and the broader industry; and
            (e) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum of 7 years of practical experience in a claims management or comparable function (claims/underwriting) within the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to underwriting and claims and other relevant certification(s) specific to this role. Such certifications may include but are not limited to Insurance Management Diploma, Bahrain Institute for Banking and Finance (BIBF) in combination with BIBF Professional Award for Certified Insurance Practitioner (BPACIP) and BIBF Professional Award for Specialist Insurance Practitioner (BPASIP).
            Head of Sales and Marketing/ Head of Business Development The Head of Sales and Marketing/ Head of Business Development should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Relevant experience to provide suitable recommendation(s) and advise(s) to policyholders;
            (c) Sufficient experience to exercise high standards of integrity and honesty by disclosing fully all relevant information to customers and effectively managing any conflict(s) of interest that rises;
            (d) Strong understanding of the licensee’s business and the broader industry; and
            (e) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum of 7 years of practical experience in a relevant role within the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) related to sales marketing and other relevant certification(s) specific to this role.
            Heads of other Functions Heads of other Functions should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Strong understanding of the licensee’s business and the broader industry;
            (c) Good understanding of the industry’s regulatory environment; and
            (d) The relevant experience and qualifications to fulfil their responsibilities.
            		 Competence could be demonstrated by:
            (a) A minimum of 5 years of practical experience in a comparable function within the insurance industry; and
            (b) An academic degree from a university at bachelor level or higher in addition to professional qualification(s) and other relevant certification(s) specific to this role.
            Money Laundering Reporting Officer (MLRO)/ Deputy Money Laundering Reporting Officer (DMLRO) The MLRO /DMLRO should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Understand the business of the insurance licensee and how the Anti Money Laundering framework applies to it;
            (c) Demonstrate independence from insurance staff who deal directly with customer; and
            (d) A thorough knowledge of the financial industry and be familiar with relevant FATF and applicable domestic regulatory requirements.
            		 Competence could be demonstrated by:
            (a) An MLRO/ DMLRO should have a minimum experience of 5 years in the financial services industry of which at least 3 years of experience in anti-money laundering or anti-money laundering related role.
            (b) The MLRO/ DMLRO should have:
            (i) A degree from a university at bachelor level or higher or a relevant professional qualification; and
            (ii) Relevant certification(s) specific to this role. Such certifications may include but are not limited to:
            1) Certified Anti-Money Laundering Specialist Examination, Association of Certified Anti-Money Laundering (ACAMS);
            2) Diploma in Anti-Money Laundering, International Compliance Association (ICA);
            3) International Diploma in Financial Crime Prevention, International Compliance Association (ICA); and/or
            4) International Advanced Certificate in Compliance and Financial Crime, International Compliance Association (ICA).
            Unit-linked investment adviser A Unit-linked investment adviser should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Strong understanding of unit-linked products, capital markets, latest product offering, and working knowledge of the various insurance investment vehicles;
            (c) Strong understanding of the licensee’s business and the broader industry; and
            (d) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum experience of 3 years in a relevant role; and
            (b) A minimum of a diploma level qualification from a university or above in investment/finance/ insurance or equivalent with the following minimum standard certification:
            (i) Diploma in Regulated Financial Planning, Chartered Insurance Institute (CII); and
            (ii) Associate (ALMI), Life Management Institute (LOMA).
            Signing Actuary A Signing Actuary should have:
            (a) A clear understanding of the role and responsibilities associated with this position;
            (b) Strong understanding of the various actuarial techniques relevant to the classes of business undertaken by the licensee; and
            (c) Strong understanding of the licensee’s business and the broader industry; and
            (d) Good understanding of the industry’s regulatory environment.
            		 Competence could be demonstrated by:
            (a) A minimum experience of 5 years in an actuarial role; and
            (b) A professional qualification(s) related to actuary and other relevant certification(s) specific to this role. Such professional
            (i) Fellow of Institute of Actuaries (FIA) or Fellow of Faculty of Actuaries (FFA), the Institute and Faculty of Actuaries; and
            (ii) Fellow of Society of Actuaries (FSA), the Society of Actuaries.
            (c) An active membership of Institute of the Faculty of Actuaries, UK; Society of Actuaries, USA; or other recognized equivalent actuarial institution.
            Added: October 2020

          • Appendix TC-2 Appendix TC-2 Professional Bodies and Qualifications

            • Relevant Professional Bodies

              (a) Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
              (b) American Institute of Certified Public Accountants (AICPA), USA
              (c) Association Cambiste Internationale (ACI), France
              (d) Association of Certified Anti-Money Laundering Specialists (ACAMS), USA
              (e) Association of Chartered Certified Accountants (ACCA), UK
              (f) Bahrain Institute of Banking and Finance (BIBF), Bahrain
              (g) Chartered Financial Analyst (CFA) Institute , USA
              (h) Chartered Alternative Investment Analyst Association (CAIA)
              (i) Chartered Institute for Securities & Investment (CISI)
              (j) Institute of Chartered Accountants in England and Wales (ICAEW), UK
              (k) Institute of Internal Auditors (IIA);
              (l) Institute of Risk Management qualifications (IRM)
              (m) Insurance Institute of India (I.I.I), India
              (n) International Compliance Association (ICA), UK
              (o) Life Office Management Association (LOMA), USA
              (p) Society of Actuaries, USA
              (q) The Chartered Insurance Institute (CII), UK
              (r) The Institute and Faculty of Actuaries, UK
              (s) The Institutes, USA
              Added: October 2020

    • HC HC High-Level Controls[versions up to January 2011]

      • HC-A HC-A Introduction[versions up to January 2011]

        • HC-A.1 HC-A.1 Purpose[versions up to January 2011]

          • Executive Summary[versions up to January 2011]

            • HC-A.1.1 [versions up to January 2011]

              This Module presents requirements that have to be met by insurance licensees with respect to:

              a) The role and composition of their Boards and Board committees; and
              b) Related high-level controls and policies.
              Amended: January 2007

            • HC-A.1.2 [versions up to January 2011]

              This Module supplements various provisions relating to corporate governance contained in Legislative Decree No. 21 of 2001, with respect to promulgating the Commercial Companies Law ('Commercial Companies Law 2001'). In case of conflict, the Commercial Companies Law shall prevail. Compliance with this Module does not guarantee compliance with the Commercial Companies Law.

              Amended: January 2007

          • Legal Basis[versions up to January 2011]

            • HC-A.1.3 [versions up to January 2011]

              This Module contains the CBB's Directive relating to high-level controls 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 to insurance licensees (including their approved persons).

              Added: January 2007

            • HC-A.1.4 [versions up to January 2011]

              For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.

              Added: January 2007

        • HC-A.2 HC-A.2 Module History[versions up to January 2011]

          • HC-A.2.1 [versions up to January 2011]

            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.

            Amended: January 2007

          • HC-A.2.2 [versions up to January 2011]

            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 the actual requirements.

            Added: January 2007

          • HC-A.2.3 [versions up to January 2011]

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

            Module Ref. Change Date Description of Changes
            HC-1.1 01/07/05 Clarification of Board approval required.
            HC-2.2 01/10/05 Corrected numbering of Paragraph.
            HC-4.1 01/10/05 Reordered Paragraphs for better flow of rules.
            HC-A.1.3 01/2007 New Rule introduced, categorizing this Module as a Directive.
            HC-B.1.2 01/2007 Clarified that overseas insurance licensees must also comply with the provisions of Paragraph HC-3.4.3 (compliance officer).
            HC-1.2.3 and 1.2.6 01/2007 Clarified rules for Board composition for Bahraini insurance licensees, other than insurance firms.
            HC-1.2.15 07/2008 Clarified board composition.
            HC-1.2.16 07/2008 Added a new Paragraph dealing with limits on number of directorships held.
            HC-3.1.2A 04/2010 Added requirements for Managing Director.
            HC-3.4.4 04/2010 Clarified that the compliance function may not be combined with the internal audit function or any operational function as they are incompatible and may create a conflict of interest.

          • HC-A.2.3 [Deleted][versions up to January 2011]

            Deleted: January 2007

          • HC-A.2.4 [versions up to January 2011]

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

      • HC-B HC-B Scope of Application[versions up to January 2011]

        • HC-B.1 HC-B.1 Insurance Licensees[versions up to January 2011]

          • HC-B.1.1 [versions up to January 2011]

            The contents of this Module — unless otherwise stated — apply to all Bahraini insurance licensees, except those operating as a Bahraini single person company or unincorporated entity.

          • HC-B.1.2 [versions up to January 2011]

            Overseas insurance licensees must satisfy the CBB that equivalent arrangements are in place at the parent entity level, and that these arrangements provide for effective high-level controls over activities conducted under the Bahrain license. Overseas insurance licensees must also comply with the specific requirement contained in Paragraph HC-3.1.3 and HC-3.4.3.

            Amended: January 2007

          • HC-B.1.3 [versions up to January 2011]

            In assessing compliance with Paragraph HC-B.1.2, the CBB will take into account regulatory requirements applicable to the parent entity, as well as the governance and systems and controls arrangements actually implemented by the parent entity and applied to the Bahrain operation. With the exception of specific requirements that explicitly apply to overseas insurance licensees (i.e. Paragraphs HC-B.1.2 and HC-3.1.3), overseas insurance licensees should consider the remaining contents of this Chapter as guidance, in judging whether high-level controls applied to the branch satisfy HC-B.1.2.

            Amended: January 2007

        • HC-B.2 HC-B.2 Branches, Subsidiaries and Affiliates[versions up to January 2011]

          • HC-B.2.1 [versions up to January 2011]

            Bahraini insurance licensees must ensure that, as a minimum, the same or equivalent provisions of this Module apply to their branches, whether located inside or outside the Kingdom of Bahrain, such that these are also subject to effective high-level controls. In instances where local jurisdictional requirements are more stringent than those applicable in this Module, the local requirements are to be applied.

          • HC-B.2.2 [versions up to January 2011]

            Bahraini insurance licensees must satisfy the CBB that financial services activities conducted in subsidiaries and other group members are subject to the same or equivalent arrangements for ensuring effective high-level controls over their activities.

            Amended: January 2007

          • HC-B.2.3 [versions up to January 2011]

            Where an insurance licensee is unable to satisfy the CBB that its subsidiaries and other group members are subject to the same or equivalent arrangements, the CBB will assess the potential impact of risks — both financial and reputational — to the licensee arising from inadequate high-level controls in the rest of the group of which it is a member. In such instances, the CBB may impose restrictions on dealings between the licensee and other group members. Where weaknesses in controls are assessed by the CBB to pose a major threat to the stability of the licensee, then its authorisation may be called into question.

            Amended: January 2007

      • HC-1 HC-1 The Board[versions up to January 2011]

        • HC-1.1 HC-1.1 Functions and Responsibilities[versions up to January 2011]

          • General Requirement[versions up to January 2011]

            • HC-1.1.1 [versions up to January 2011]

              With the exception of unincorporated entities and single person companies, all Bahraini insurance licensees must have a Board of Directors ('the Board'). The Board is ultimately accountable and responsible for the management and performance of the licensee.

            • HC-1.1.2 [versions up to January 2011]

              To discharge its responsibility effectively, a Board typically delegates various functions and tasks, for instance to Board sub-committees, management and other employees. When it delegates, the Board nonetheless retains ultimate responsibility for the performance of those functions and tasks.

            • HC-1.1.3 [versions up to January 2011]

              Insurance brokers who were licensed prior to the introduction of Volume 3 (Insurance), and who were unincorporated entities or natural persons at that time, may continue as such until 31 December 2006 (refer to ES-2.2.1). Under Volume 3, insurance brokers and insurance consultants may be licensed as a single person company or (in the latter case only) a sole proprietorship: see Section AU-2.1.

              Amended: January 2007

          • Specific Requirements[versions up to January 2011]

            • HC-1.1.4 [versions up to January 2011]

              The Board must establish and maintain a statement of its responsibilities, defining its functions and tasks and those delegated to Board sub-committees and senior management. This statement must be clearly communicated to Board members and senior management.

            • HC-1.1.5 [versions up to January 2011]

              The Board must approve and review at least annually the licensee's:

              (a) Strategic plans;
              (b) Management structure and responsibilities; and
              (c) Systems and controls framework (including its policies and procedures).
              Amended: January 2007

            • HC-1.1.6 [versions up to January 2011]

              The Board must also regularly review:

              (a) The licensee's implementation of its strategy and operational performance;
              (b) The performance of its executive management; and
              (c) The level of risk.
              Amended: January 2007

            • HC-1.1.7 [versions up to January 2011]

              The Board must set out clearly and review on a regular basis who has authority to enter the licensee into contractual obligations. The Board should set a materiality threshold so that contractual obligations above this set threshold are regularly reported to the Board. In setting the materiality threshold, the Board will consider the financial impact the contractual obligations may have in relation to its capital.

            • HC-1.1.8 [versions up to January 2011]

              The Board must have effective policies and processes in place to address its members' potential conflicts of interest, including matters such as:

              (a) Related party transactions;
              (b) The misuse of assets belonging to the licensee; and
              (c) The use of privileged information for personal advantage ('insider trading').
              Amended: January 2007

            • HC-1.1.9 [versions up to January 2011]

              Board members must declare in writing all of their interests in other enterprises or activities (whether as a shareholder, manager, or other form of participation) to the Board (or the Nominations or Audit Committee) on an annual basis. Any Board member should also absent himself from any discussion or decision-making that involves a subject where he is incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

            • HC-1.1.10 [versions up to January 2011]

              The Board and its members must act with honesty, integrity, due skill and care, and in the best interests of the licensee, its shareholders and policyholders.

            • HC-1.1.11 [versions up to January 2011]

              In assessing compliance with Paragraph HC-1.1.10, the CBB will take into account all actions of the Board and its members. The interest of the licensee includes the licensee's continued compliance with all relevant Rules and Regulations, and the interests of employees, customers and other stakeholders. The interest of shareholders includes the current and future value of the licensee, its status as a going concern, transparency and disclosure of information to the market. The interest of policyholders includes ensuring that the licensee fulfils its obligations under its policies and treats all policyholders fairly and pays equal regard to the interests of all policyholders and groups of policyholders.

              Amended: January 2007
              Amended: October 2007

          • Additional Guidance[versions up to January 2011]

            • HC-1.1.12 [versions up to January 2011]

              In assessing the licensee's strategic plans (Paragraph HC-1.1.5), the CBB would expect the Board to address the licensee's current and future aspirations with respect to its position in the market place, its size, products, value and other key aspirations that would be considered important by investors. Furthermore, the Board should demonstrate that it is able to proactively identify and understand the significant risks that the licensee faces in achieving its business objectives. A description of the licensee's strategy should be included in the annual financial statements. See also Module PD (Public Disclosure).

              Amended: January 2007

            • HC-1.1.13 [versions up to January 2011]

              In assessing the management framework (Paragraph HC-1.1.5), the CBB would expect the Board to have effective policies and processes in place for:

              (a) Ensuring a formal and transparent Board nomination process;
              (b) Appointing senior managers, and ensuring that they have the necessary integrity, technical and managerial competence, and experience;
              (c) Overseeing succession planning, and minimizing undue reliance on key individuals;
              (d) Reviewing key senior management and Board remuneration packages and ensuring such packages are consistent with the corporate values and strategy of the licensee and encourage prudent risk taking;
              (e) Monitoring and evaluating management's performance in implementing agreed strategy and business plans, and ensuring appropriate resources are available; and
              (f) Approving budgets and reviewing performance against those budgets.
              Amended: January 2007

            • HC-1.1.14 [versions up to January 2011]

              In assessing the systems and controls framework (Paragraph HC-1.1.5), the CBB would expect the Board to be able to demonstrate that its operations, individually and collectively:

              (a) Are measured, monitored and controlled by appropriate, effective and prudent risk management systems commensurate with the scope of the licensee's activities. These should pro-actively identify as well as monitor risk. The systems should produce information on a timely basis, and in a form and quality appropriate to the needs of the different recipients;
              (b) Are supported by an appropriate control environment. The risk management and financial reporting functions must be independent of business lines and must be run by individuals not involved with the day-to-day running of the various business areas; and
              (c) Make effective use of the work of internal and external auditors. The internal audit function should be independent of the senior management, reporting to the Audit committee. The Audit Committee should ensure that the external auditor firm and its partners are truly independent of the licensee and have no financial or other relationship with the licensee. Audit findings should be used as an independent check on the information received from management about the licensee's operations and performance and the effectiveness of internal controls.
              Amended: January 2007

        • HC-1.2 HC-1.2 Composition[versions up to January 2011]

          • HC-1.2.1 [versions up to January 2011]

            Captive insurance firms are exempt from the requirements of this section, except for Paragraphs HC-1.2.2 and HC-1.2.13, which apply to all Bahraini insurance licensees (except for unincorporated entities and single person companies).

            Amended: January 2007

          • HC-1.2.2 [versions up to January 2011]

            The Memorandum and Articles of Association of licensees must adequately set out procedures for the appointment, removal and retirement of Directors.

          • HC-1.2.3 [versions up to January 2011]

            For insurance firms, the Board must comprise at least five Directors. For Bahraini insurance licensees, other than insurance firms, the Board must comprise at least three Directors. For all Bahraini insurance licensees, at least half the Board's members, including the Board's chairman, must be non-executive Directors.

            Amended: January 2007
            Amended: October 2007

          • HC-1.2.4 [versions up to January 2011]

            A non-executive Director is a Director who is not involved in the day-to-day management of the licensee and is not an employee of the licensee. The Chairman of the Board cannot, therefore, also perform the role of Chief Executive.

            Amended: January 2007
            Amended: October 2007

          • HC-1.2.5 [versions up to January 2011]

            For licensees that do not meet the requirements of Paragraph HC-1.2.4, the CBB may grant, upon application by the licensee, a transition period allowing the licensee to maintain the current structure for a limited period (Refer to ES-2.2.2).

            Amended: January 2007

          • HC-1.2.6 [versions up to January 2011]

            The CBB requires Boards of insurance firms to include at least two independent non-executive members. For Bahraini insurance licensees, other than insurance firms, Boards must include at least one independent non-executive member.

            Amended: January 2007

          • HC-1.2.7 [versions up to January 2011]

            The Board's non-executive Directors must comprise a sufficient number of independent Directors to apply independent judgement to, amongst other things, tasks where there is a potential for conflict of interest or there is a need for impartiality.

            Amended: January 2007
            Amended: October 2007

          • HC-1.2.8 [versions up to January 2011]

            In the case of a Bahraini insurance licensee, which is part of an overseas group, where there is sufficient independent scrutiny of the operations of the firm on a group wide basis, the CBB will consider exempting the licensee from the requirements of Paragraph HC-1.2.6.

            Amended: January 2007

          • HC-1.2.9 [versions up to January 2011]

            The Board must outline in its annual report its criteria and materiality thresholds for the definition of 'independence'. The Directors must be identified in the annual report as executive, non-executive, or independent non-executive.

          • HC-1.2.10 [versions up to January 2011]

            In assessing independence, the CBB will take into account whether the person concerned is (or has been):

            (a) A controller or representative of the controller of the licensee (see Chapter GR-5 for the definition of controller);
            (b) A business partner or first-degree relative of an employee or of a Board member of the licensee concerned, or of a member of the group of which the licensee is a member;
            (c) A professional adviser to the licensee or the group of which it is a member; and
            (d) Free of any significant contractual or business relationship with the licensee, or of any of the members of a group of which it is a member.
            Amended: January 2007

          • HC-1.2.11 [versions up to January 2011]

            In assessing the number of independent non-executive Directors, the CBB will seek to ensure that independent judgement is applied to matters such as Board remuneration and audit issues.

            Amended: January 2007

          • HC-1.2.12 [versions up to January 2011]

            The appointment of Board members is conditional on the approval of the CBB. (See Section AU-1.2).

            Amended: January 2007

          • HC-1.2.13 [versions up to January 2011]

            The Board must ensure that collectively it has sufficient expertise to understand the important issues relating to the operation and control of its company.

          • HC-1.2.14 [versions up to January 2011]

            It is not expected that every Board member is proficient in all areas, but collectively the Board is expected to have the required expertise. There should also be agreed-upon procedures by the Board for Directors to take independent advice if necessary at the licensee's expense. The CBB also expects Board members to undertake relevant training on a regular basis to help them fulfill their responsibilities as Directors.

            Amended: January 2007

          • HC-1.2.15 [versions up to January 2011]

            The Board must periodically assess its composition and size and, where appropriate, reconstitute itself and its committees by selecting new Directors to replace long-standing members or those whose contributions to the licensee or its committees is not adequate.

            Amended: July 2008

          • HC-1.2.16 [versions up to January 2011]

            A Board member may have a maximum of two Directorships of financial institutions inside Bahrain. However, two Directorships of licensees within the same category of licensees would not be permitted. Insurance firms may approach the Central Bank for exemption from this limit where the Directorships concern financial institutions within the same group.

            Added: July 2008

        • HC-1.3 HC-1.3 Meetings and Attendance[versions up to January 2011]

          • HC-1.3.1 [versions up to January 2011]

            The Board must meet sufficiently often to enable it to discharge its responsibilities effectively, taking into account the insurance licensee's scale and complexity.

          • HC-1.3.2 [versions up to January 2011]

            The CBB expects that the scale and complexity of most licensees will require meetings to be held at least quarterly (as required by the Companies Law 2001). For the largest, most complex licensees, more frequent Board meetings may be more appropriate.

            Amended: January 2007

          • HC-1.3.3 [versions up to January 2011]

            Board members must attend at least three-quarters of all Board meetings held during any twelve-month period in person. Board rules must require members to step down if they are not actively participating in Board meetings.

          • HC-1.3.4 [versions up to January 2011]

            The CBB expects Board members who fail to attend at least three-quarters of all Board meetings in any twelve-month period to step down, unless the Board is able to satisfy the CBB that there are valid reasons for the Director concerned to remain a Board member.

            Amended: January 2007

          • HC-1.3.5 [versions up to January 2011]

            At least half the Board meetings of Bahraini insurance licensees in any twelve-month period must be held in the Kingdom of Bahrain.

          • HC-1.3.6 [versions up to January 2011]

            The Board must be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. The Board must also maintain adequate records of its meetings, such that key decisions and how they are arrived at can be traced.

      • HC-2 HC-2 Committees[versions up to January 2011]

        • HC-2.1 HC-2.1 Board Committees[versions up to January 2011]

          • HC-2.1.1 [versions up to January 2011]

            Bahraini insurance licensees must establish Board Committees appropriate to the scale and complexity of their operations.

          • HC-2.1.2 [versions up to January 2011]

            Board Committees can enhance the effectiveness of Boards, both in their management of a licensee's risks, and in addressing potential conflicts of interest. In particular, three key areas where there is a need for checks and balances within the Board include: (a) the nomination of Directors; (b) the remuneration of Directors; and (c) the audit of the licensee's financial performance. These areas are typically addressed by, respectively, the Nominations Committee, the Remuneration Committee and the Audit Committee. Where a licensee's Board does not consider it necessary to create Board Committees, it must be prepared to give reasons for its decision to the CBB.

            Amended: January 2007

          • HC-2.1.3 [versions up to January 2011]

            The CBB expects licensees, as a minimum, to establish an Audit Committee. The CBB would expect larger licensees to establish other committees as well. Where a licensee's Board does not consider it necessary to create Board committees, it must be prepared to give reasons for its decision to the CBB.

            Amended: January 2007

          • HC-2.1.4 [versions up to January 2011]

            The CBB would expect to see committees dealing with the issues listed in (a) to (c) in Paragraph HC-2.1.2 to be chaired by an independent non-executive Director and for the majority of its members to be independent non-executive Directors.

            Amended: January 2007

          • HC-2.1.5 [versions up to January 2011]

            Where an insurance licensee has been granted an exemption under Paragraph HC-1.2.8, upon application, an exemption may also be granted from Paragraph HC-2.1.1.

            Amended: January 2007

          • HC-2.1.6 [versions up to January 2011]

            Board Committees must have:

            (a) Written terms of reference, which are reviewed annually;
            (b) Adequate records of their meetings, such that key decisions and how they are arrived at can be traced; and
            (c) Appropriate membership, which addresses potential conflicts of interest.
            Amended: January 2007

        • HC-2.2 HC-2.2 Executive Management Committee[versions up to January 2011]

          • HC-2.2.1 [versions up to January 2011]

            Bahraini insurance firms (other than captive insurance firms) must consider the need to establish an Executive Management Committee to support the Chief Executive Officer/General Manager.

            Amended: January 2007

          • HC-2.2.2 [versions up to January 2011]

            Insurance intermediaries and insurance managers, unlike other insurance licensees, are not required to consider the need to operate an Executive Management Committee.

          • HC-2.2.3 [versions up to January 2011]

            Executive Management Committees can facilitate proper corporate governance by ensuring that senior management discuss key issues affecting the licensee openly and collectively. Where an insurance firm does not consider it necessary to create an Executive Management Committee, it must be prepared to give reasons for its decision to the CBB, and to explain what checks and balances will apply to executive management.

            Amended: January 2007

          • HC-2.2.4 [versions up to January 2011]

            The Committee should comprise the Chief Executive Officer/General Manager and appropriate heads of functions, such as the head of risk management, the Chief Finance Officer, the Chief Operations Officer, the head of underwriting and other key business divisions.

            Amended: January 2007

          • HC-2.2.5 [versions up to January 2011]

            The Committee's responsibilities should include the oversight of day-to-day implementation of strategy, limits and procedures. It should also monitor the day-to-day performance of individual business lines and departments relative to targets, limits, and policies (in conjunction with other committees and functions, such as the Risk Committee or the Risk Management or Compliance functions).

          • HC-2.2.6 [versions up to January 2011]

            The Board is responsible for ensuring that there is a clear framework of delegated authorities and a clear demarcation of duties between the Board, the Executive Committee, the Chief Executive Officer and other members of senior management.

            Amended: January 2007

        • HC-2.3 HC-2.3 Shari'a Supervisory Board[versions up to January 2011]

          • HC-2.3.1 [versions up to January 2011]

            An insurance firm licensed to conduct insurance business according to takaful principles must establish a Shari'a Supervisory Board. The firm must also comply with AAOIFI Governance Standard for Islamic Financial Institutions No. 1 ('Shari'a Supervisory Board: Appointment, Composition and Report').

            Amended: January 2007

          • HC-2.3.2 [versions up to January 2011]

            The function of the Shari'a Supervisory Board is to review the operations of the takaful company and ensure that these are compliant with the principles of the Shari'a. In doing so, the Shari'a Supervisory Board is likely to provide guidance and advice to the takaful company's Board and management on all aspects of a takaful operation, with a particular focus on product design, the handling of claims and surpluses, the calculation and allocation of the operator's costs, the approval of investments and accounting issues.

            Amended: January 2007

          • HC-2.3.3 [versions up to January 2011]

            In the case of overseas insurance firms operating according to takaful principles, the requirement to appoint a Shari'a Supervisory Board in Paragraph HC-2.3.1 may be waived by CBB, if the firm has appointed an equivalent Shari'a Supervisory Board at the parent entity level, of sufficient expertise and credibility.

            Amended: January 2007

          • HC-2.3.4 [versions up to January 2011]

            An insurance firm licensed to conduct insurance business according to takaful principles must comply with all other AAOIFI governance standards for Islamic Financial Institutions.

          • HC-2.3.5 [versions up to January 2011]

            For takaful firms, full compliance with AAOIFI Governance Standard No.1 is required. The CBB would actively encourage full compliance with all the AAOIFI governance standards but in so doing accepts that these standards themselves include not only standards but also guidance.

            Amended: January 2007

          • HC-2.3.6 [versions up to January 2011]

            The office of Shari'a Board Member is a controlled function: see Module AU (Authorisation).

            Amended: January 2007
            Amended: October 2007

          • HC-2.3.7 [versions up to January 2011]

            The Shari'a Board requirements contained in Section HC-2.3 are additional to the other high-level control requirements contained in this Module.

      • HC-3 HC-3 Other High-Level Controls[versions up to January 2011]

        • HC-3.1 HC-3.1 Chief Executive Officer / General Manager[versions up to January 2011]

          • HC-3.1.1 [versions up to January 2011]

            Insurance licensees must appoint a person to undertake the function of Chief Executive Officer, unless they fall into the categories specified in Paragraph HC-3.1.3,

            Amended: July 2007

          • HC-3.1.2 [versions up to January 2011]

            The Chief Executive Officer is responsible for the executive management and performance of the licensee, within the framework of delegated authorities set by the Board. The function of Chief Executive Officer is a controlled function, and the person nominated to that post therefore requires prior CBB approval (see Module AU (Authorisation)).

            Amended: July 2007

          • HC-3.1.2A [versions up to January 2011]

            The Chairman of the Board may not act as the Chief Executive or General Manager. However, in the case of appointing a Director on the Board as the Managing Director of the insurance licensee, such person:

            (a) Should be fully responsible for the executive management and performance of the insurance licensee, within the framework of delegated authorities set by the Board;
            (b) Must devote full-time working hours to the insurance licensee; and
            (c) Must not be employed at any other firm.
            Added: April 2010

          • HC-3.1.3 [versions up to January 2011]

            Unincorporated entities, single person companies and overseas insurance licensees must appoint a person to undertake the function of General Manager.

          • HC-3.1.4 [versions up to January 2011]

            In the case of unincorporated entities and single person companies, the General Manager is the person directing the affairs of the licensee. In the case of overseas insurance licensees, the General Manager is the most senior manager resident in Bahrain, accountable to the CBB for the operations of the Bahrain branch and its compliance with CBB Regulations and Directives. The function of General Manager is a controlled function, and the person nominated to that post requires prior CBB approval (see Module AU).

            Amended: January 2007

          • HC-3.1.5 [versions up to January 2011]

            Residency requirements apply to Chief Executive Officers and General Managers: see Section AU-2.2.

            Amended: January 2007

        • HC-3.2 HC-3.2 Mapping of Risks and Responsibilities[versions up to January 2011]

          • HC-3.2.1 [versions up to January 2011]

            The requirements in this section do not apply to captive insurance firms but should be considered as guidance.

            Amended: January 2007

          • HC-3.2.2 [versions up to January 2011]

            In conjunction with the Board, the Chief Executive Officer/General Manager must maintain a clear mapping of the risks faced by the business and document the organisational and other controls maintained to meet those risks.

            Amended: January 2007

          • HC-3.2.3 [versions up to January 2011]

            In conjunction with the Board, the Chief Executive Officer/General Manager must maintain a clear and appropriate apportionment of significant responsibilities amongst senior management.

            Amended: January 2007

          • HC-3.2.4 [versions up to January 2011]

            The apportionment must be clear as to who has which responsibility, and must permit the business and affairs of the licensee to be adequately monitored and controlled by the Board, the Chief Executive Officer/General Manager, and relevant heads of function.

            Amended: January 2007

          • HC-3.2.5 [versions up to January 2011]

            The apportionment must also ensure appropriate segregation of duties where these are required for effective controls.

        • HC-3.3 HC-3.3 Internal Audit[versions up to January 2011]

          • HC-3.3.1 [versions up to January 2011]

            Bahraini insurance licensees (except for unincorporated entities and single person companies) must establish an internal audit function to monitor the adequacy of their systems and controls.

          • HC-3.3.2 [versions up to January 2011]

            The CBB considers it best practice for captive insurers to fall within the remit of the internal audit functions of their groups and be subject to periodic review, although no formal arrangements for internal audit cover captive insurers.

            Amended: January 2007

          • HC-3.3.3 [versions up to January 2011]

            Part or all of the internal audit function may be outsourced, or provided at group level, subject to the requirements of Section RM-7.6. Amongst other things, these require licensees to retain responsibility for their internal audit programme, and that appropriate safeguards are built into the outsourcing contract. Furthermore, a licensee cannot outsource its internal audit function to its external auditors (with limited exceptions). Prior approval from the CBB is required for significant outsourcing arrangements, including all outsourcing of internal audit. A licensee's head of internal audit is a controlled function and requires CBB approval prior to being appointed (see Section AU-1.2).

            Amended: January 2007

          • HC-3.3.4 [versions up to January 2011]

            Internal audit functions must have terms of reference that clearly indicate:

            (a) The scope and frequency of audits;
            (b) Reporting lines; and
            (c) The review and approval process applied to audits.
            Amended: January 2007

          • HC-3.3.5 [versions up to January 2011]

            Paragraph HC-3.3.4 applies irrespective of whether the internal audit function is outsourced. Where it is outsourced, the CBB would expect to see these matters addressed in the contract with the outsourcing provider.

            Amended: January 2007

          • HC-3.3.6 [versions up to January 2011]

            Internal audit functions must report directly to the Audit committee or, where none exists, to the Board. They must have unrestricted access to all the appropriate records of the insurance licensee. They must have open and regular access to the Audit Committee, the Board, the Chief Executive, and the licensee's external auditors.

            Amended: January 2007

          • HC-3.3.7 [versions up to January 2011]

            Internal audit functions must have adequate staff levels with appropriate skills and knowledge, such that they can act as an effective challenge to the business. Where the function is not outsourced, the head of the function should be a senior and experienced employee. Internal audit functions must not perform other activities that compromise their independence.

            Amended: January 2007

          • HC-3.3.8 [versions up to January 2011]

            The CBB would expect to see in place a formal audit plan that:

            (a) Is reviewed and approved at least annually by the Audit Committee or, where none exists, the Board;
            (b) Is risk-based, with an appropriate scoring system; and
            (c) Covers all material areas of a licensee's operations over a reasonable timescale, including (where relevant) the process by which a licensee obtains professional actuarial expertise to develop and verify its pricing and reserving policies.
            Amended: January 2007

          • HC-3.3.9 [versions up to January 2011]

            Internal Audit reports should also be:

            (a) Clear and prioritised, with action points directed towards identified individuals;
            (b) Timely; and
            (c) Distributed to the Audit Committee or Board and appropriate senior management.
            Amended: January 2007

          • HC-3.3.10 [versions up to January 2011]

            Insurance licensees should also have processes in place to deal with recommendations raised by internal audit to ensure that they are:

            (a) Dealt with in a timely fashion;
            (b) Monitored until they are settled; and
            (c) Raised with senior management if they have not been adequately dealt with.
            Amended: January 2007

        • HC-3.4 HC-3.4 Compliance[versions up to January 2011]

          • HC-3.4.1 [versions up to January 2011]

            Insurance licensees must take reasonable care to establish and maintain effective systems and controls for compliance with applicable requirements in the Kingdom's legislation and those set by the CBB, and those established under any other statute or regulator to which the insurance licensee is subject.

            Amended: January 2007

          • HC-3.4.2 [versions up to January 2011]

            Depending on the nature, scale and complexity of its business, an insurance licensee should consider having a separate compliance function. A compliance function should:

            (a) Document its organisation and responsibilities;
            (b) Be appropriately staffed with competent individuals;
            (c) Have unrestricted access to the licensee's relevant records; and
            (d) Have ultimate recourse to the Board.
            Amended: January 2007

          • HC-3.4.3 [versions up to January 2011]

            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.
            Amended: January 2007

          • HC-3.4.4 [versions up to January 2011]

            The Compliance Officer is a controlled function and the requirements relating to approved persons must be met (see Chapter AU-1.2). If the scale and nature of the licensee's operations are limited, then the individual who performs the function of Compliance Officer may also take on other responsibilities, providing this does not create a potential conflict of interest. The compliance function may not be combined with the internal audit function or any operational function as they are incompatible and may create a conflict of interest.

            Amended: April 2010

          • HC-3.4.5 [versions up to January 2011]

            In the case of a captive insurance firm, where the captive insurer is managed by an insurance manager, the insurance manager must designate a Compliance Officer for the managed firms. A self-managed captive insurer must also appoint a Compliance Officer, although this role may be combined with other functions.

            Amended: January 2007

        • HC-3.5 HC-3.5 Remuneration Policies[versions up to January 2011]

          • HC-3.5.1 [versions up to January 2011]

            An insurance licensee's remuneration policies (including incentives, bonuses and other rewards), must not encourage short-term or reckless behaviour.

          • HC-3.5.2 [versions up to January 2011]

            Levels of remuneration should be sufficient to attract, retain and motivate Directors and employees of the quality required to run the licensee successfully, but a licensee should avoid paying more than is necessary for this purpose. Where remuneration is structured so as to link rewards to corporate and individual performance, criteria should avoid excessive focus on short-term profitability measures.

          • HC-3.5.3 [versions up to January 2011]

            The review of Directors' remuneration must be a standing item on the insurance licensee's Annual General Meeting agenda, and must be considered by shareholders at every Annual General Meeting. Policies in respect of Directors' remuneration (including pension and severance arrangements) and bonuses must be clearly disclosed in the annual financial statements.

            Amended: January 2007

          • HC-3.5.4 [versions up to January 2011]

            Directors' remuneration must comply with all applicable laws and Regulations, including the provisions contained in Legislative Decree No. 21 of 2001, with respect to promulgating the Commercial Companies Law, capping Directors' remuneration as a percentage of net profits.

            Amended: January 2007

        • HC-3.6 HC-3.6 Corporate Ethics[versions up to January 2011]

          • HC-3.6.1 [versions up to January 2011]

            The requirements in this Section do not apply to captive insurance firms, unincorporated entities and single person companies, but should be considered as guidance.

            Amended: January 2007

          • HC-3.6.2 [versions up to January 2011]

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

          • HC-3.6.3 [versions up to January 2011]

            The code of conduct must establish standards by giving examples or expectations of:

            (a) Honesty;
            (b) Integrity;
            (c) Leadership;
            (d) Reliability; and
            (e) Professionalism.
            Amended: January 2007

          • HC-3.6.4 [versions up to January 2011]

            The Board must establish and disseminate to employees and appointed representatives policies and processes for the identification, reporting and prevention or management of potential conflicts of interest, including matters such as:

            (a) Related party transactions;
            (b) The misuse of the licensee's assets; and
            (c) The use of privileged information for personal advantage ('insider trading').
            Amended: January 2007

          • HC-3.6.5 [versions up to January 2011]

            Any transaction in which Board members or any member of management have potential conflicts of interest should either be proscribed or require formal documented approval by the Board, with measures taken to manage those conflicts. (See also Paragraph HC-1.1.8)

            Amended: January 2007

          • HC-3.6.6 [versions up to January 2011]

            The Board must ensure that policies and procedures are in place to ensure that necessary customer confidentiality is maintained.

            Amended: January 2007

        • HC-3.7 HC-3.7 Transparency and Disclosure[versions up to January 2011]

          • HC-3.7.1 [versions up to January 2011]

            The requirements in this Section do not apply to captive insurance firms, but should be considered as guidance. Unincorporated entities and single person companies are exempt from these requirements.

            Amended: January 2007

          • HC-3.7.2 [versions up to January 2011]

            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.

          • HC-3.7.3 [versions up to January 2011]

            Disclosure policies must be reviewed for compliance with the CBB's disclosure requirements.

            Amended: January 2007

          • HC-3.7.4 [versions up to January 2011]

            Licensees should refer to Module PD (Public Disclosure) regarding the specific disclosures required.

      • HC-4 HC-4 Annual Certification[versions up to January 2011]

        • HC-4.1 HC-4.1 Annual Board Review and Certification[versions up to January 2011]

          • HC-4.1.1 [versions up to January 2011]

            The Board must assess and document each year 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.

          • HC-4.1.2 [versions up to January 2011]

            The requirements in Chapter HC-4 do not apply to captive insurance firms, but should be considered as guidance. Unincorporated entities and single person companies are exempt from these requirements.

            Amended: January 2007

          • HC-4.1.3 [versions up to January 2011]

            The results of the review referred to in Paragraph HC-4.1.1 must be summarised in a written certification, to be signed by all Board members, and sent to the CBB within 3 months of the financial year-end of the licensee. The Board must report any material deficiencies identified during the review, along with an action plan and timescales for their correction.

            Amended: January 2007

          • HC-4.1.4 [versions up to January 2011]

            The Board certification comprises a prescribed standard statement, to be signed by all Board members, attached to which should be a summary of the steps the Board has taken in carrying out the review; a summary of the results of that review, and a summary action plan (with timescales) for addressing any identified material deficiencies. The prescribed standard statement is included in Part B of Volume 3 (Insurance), under 'CBB Reporting Forms': see 'Directors' High-Level Controls Certification' contained in the Insurance Firm Return (Form IFR) and the Insurance Intermediaries and Managers Return (Form IMR).

            Amended: January 2007

        • HC-4.2 HC-4.2 Scope of the Review[versions up to January 2011]

          • HC-4.2.1 [versions up to January 2011]

            The Board's review should cover the following specific matters:

            (a) That the Board has reassessed the licensee's objectives and plans, and has reviewed the licensee's corporate strategy document;
            (b) That the Board has reassessed the licensee's overall risk profile, and its mapping of risks and the control environment put in place to meet those risks (see Section HC-3.2). The Board must comment whether the control environment remains effective and appropriate;
            (c) That the Board has assessed the licensee's internal controls, to confirm that these are based on established policies and procedures approved by the Board and provide reasonable assurance of the integrity and reliability of its financial records;
            (d) That the Board has assessed whether adherence to established internal limits and controls was continuously monitored;
            (e) That the Board has assessed that all new (or material changes to) significant policies, procedures and products introduced by the licensee since the last Board certification were appropriately reviewed and approved at the time;
            (f) That the Board has assessed that management and staff have complied with the licensee's corporate code of conduct (see Section HC-3.6); and
            (g) That in the period under review, the Board had received and reviewed the external auditor's management letter within six months of the (previous) financial year end, together with the licensee's audit committee and senior management comments on the letter and any proposed actions.
            Amended: January 2007

          • HC-4.2.2 [versions up to January 2011]

            With respect to HC-4.2.1 (g), a Director's certificate received (for example) no later than 31 March 2004, covering the year ending 31 December 2003, would need to certify that the management letter for the year ending 31 December 2002 was received and reviewed by the Board by 30 June 2003.

    • DP Dispute Procedures [versions up to 30 September 2012]

      [This module in Volume 3 has been intentionally left blank: requirements relating to Dispute Procedures will be developed later]

      Amended: January 2007
      Amended: October 2007

    • GR GR General Requirements

      • GR-5.3 GR-5.3 Suitability of Controllers

        • GR-5.3.3 [Replaced 1 October 2015]

          Natural persons who intend to take a stake of 20% or more in a Bahraini insurance licensee are subject to enhanced scrutiny, given the CBB's position as home supervisor of such licensees. The level of scrutiny and of expected compliance with the above standards become more onerous as the level of proposed ownership increases. Natural persons will not normally be approved to take majority control (i.e. a stake of 50% or more of either the capital or voting rights) of a Bahraini insurance licensee.

          Amended: October 2011
          Amended: July 2007
          Amended: October 2007

        • GR-5.3.5 [Replaced 1 October 2015]

          Legal persons who intend to take a stake of 20% or more in a Bahraini insurance licensee are subject to enhanced scrutiny, given the CBB's position as home supervisor of such licensees. The level of scrutiny and of expected compliance with the above standards becomes more onerous as the level of proposed ownership increases. In particular, unregulated legal persons will not normally be approved to take majority control (i.e. a stake of 50% or more of either the capital or voting rights of a Bahraini insurance licensee, unless the proposed parent is a well-established business (that satisfies the above conditions), and its ownership would not pose undue conflicts of interest. Regulated legal persons will normally only be approved to take majority control where — in addition to the above conditions — the resulting group would be subject to effective consolidated supervision in accordance with relevant international standards; and the home supervisor of the parent entity has agreed to the proposed acquisition, as well as to the sharing of relevant prudential information for supervisory purposes (expressed, if necessary, through the signing of a Memorandum of Understanding between the CBB and the home supervisor, setting out their respective supervisory responsibilities).

          Amended: October 2011
          Adopted: July 2007

        • GR-5.3.6 [Replaced 1 October 2015]

          The CBB may contact references and supervisory bodies in connection with any information provided to support an application for controller. The CBB may also ask for further information, in addition to that provided in the Form 2, if required to satisfy itself as to the suitability of the applicant.

          Adopted: July 2007

      • GR-9.1 GR-9.1 Key Provisions

        • GR-9.1.1

          An insurance firm may appoint as its representative for its Bahrain business a person who is not licensed by the CBB, known as an appointed representative. However, appointed representatives must be registered with the CBB. Insurance firms that appoint appointed representatives are called licensed principals.

          Amended: October 2009
          Amended: July 2007

        • GR-9.1.1A

          This Chapter does not apply to insurance firms whose business is limited to reinsurance.

          Adopted: October 2009

        • GR-9.1.1B

          Insurance licensees, other than insurance firms, may not appoint appointed representatives. More specifically, insurance brokers may not appoint representatives acting on their behalf.

          Adopted: October 2009

        • GR-9.1.1C

          The requirements for registration and minimum qualifications of appointed representatives are effective 1st January 2010 (refer to ES-2.5.4).

          Adopted: October 2009

        • GR-9.1.2

          Appointed representatives are persons acting on behalf, and under the overall control of a licensed principal. They are effectively an extension of the licensed principal. The licensed principal takes full responsibility for the actions of their appointed representatives vis-à-vis the CBB. Note that only insurance firms may act as licensed principals.

          Amended: July 2007

        • GR-9.1.3

          An appointed representative may be a natural or corporate person. An appointed representative may be a CBB licensed firm (e.g. a bank) that does not hold any of the permissions of insurance firm, insurance broker, or insurance consultant. Where the appointed representative is a corporate entity, its memorandum and articles of association must include the activities of the appointed representative of the CBB licensed insurance firm, as required under Resolution 11 issued as per Article 74 of the CBB Law.

          Amended: October 2009
          Amended: July 2007

        • GR-9.1.3A

          An appointed representative must be registered with the CBB in accordance with Paragraph AU-1.3A.

          Adopted: October 2009

        • GR-9.1.4

          An appointed representative may have agencies with no more than one licensed principal per type of business. For the purposes of this requirement the types of business are as follows:

          (a) General insurance as defined in Paragraph AU-1.4.9; and
          (b) Long-term insurance (as defined in Paragraph AU-1.4.8).
          Amended: October 2009
          Amended: July 2007

        • GR-9.1.4A

          An appointed representative that is authorised to conduct both Islamic and conventional business by virtue of its license provided by the CBB, may have different agencies per type of business, for both Islamic and conventional insurance business.

          Adopted: October 2009

        • GR-9.1.5

          An appointed representative may only undertake the types of business for which the licensed principal is authorised to undertake by the CBB.

          Amended: July 2007

        • GR-9.1.5A

          An insurance firm can only nominate appointed representatives that meet minimum qualifications and fit and proper requirements of the CBB.

          Adopted: October 2009

        • GR-9.1.5B

          For purposes of Paragraph GR-9.1.5A, the minimum qualifications of appointed representatives recognised by the CBB are:

          (a) For general insurance, the Award in General Insurance from the Chartered Insurance Institute (CII) and the Bahrain Institute of Banking and Finance (BIBF); and
          (b) For long-term insurance, the Award in Financial Planning from the Chartered Insurance Institute (CII) and the Bahrain Institute of Banking and Finance (BIBF).
          Adopted: October 2009

        • GR-9.1.5C

          Upon written application to the CBB, equivalent or higher qualification from an internationally recognised insurance institute may be acceptable, provided it substantially covers the core syllabuses of the minimum qualifications outlined in Paragraph GR-9.1.5B.

          Adopted: October 2009

        • GR-9.1.5D

          Where the appointed representative is a retailer of goods, including motor vehicles, or a travel agent selling insurance policies or helping customers make a claim under the policy and the insurance services provided are complementary to the main activity conducted by the appointed representative, an exemption from the requirements of Paragraph GR-9.1.5B may be sought by the licensed principal. A request for such exemption must be submitted in writing to the Director, Insurance Supervision outlining what alternative training has been provided to the appointed representative to ensure that potential policyholders are treated in a fair and equitable manner and that the provision of insurance coverage complies with all the requirements outlined in Module BC, and in particular with Chapter BC-2, The Insurance Code of Practice.

          Adopted: October 2009

        • GR-9.1.6

          In the case where an appointed representative acts as agent for more than one licensed principal, it must arrange its business to achieve reasonable segregation between principals to allow each licensed principal to carry out monitoring of its business under its agency agreement.

        • GR-9.1.7

          An appointed representative must maintain separate bank accounts for any monies relating to premiums and claims handled on behalf of each licensed principal.

        • GR-9.1.8

          An appointment by an insurance firm of an appointed representative must be the subject of a written contract of agency. This contract must state, inter alia:

          (a) The name of the appointed representative;
          (b) The name of the licensed principal;
          (c) That the licensed principal is responsible for the actions and conduct of the representative concerned when acting or purporting to act under it (without prejudice to any rights to bring actions for damages by the licensed principal against the appointed representative or vice versa);
          (d) The type(s) of business for which the agency is granted;
          (e) That the appointed representative allows full access to the CBB, the licensed principal and the licensed principal's external auditors, given reasonable notice, to all records relating to the business falling within its agency;
          (f) The terms and conditions for the handling of and accounting for client money, including a statement that the appointed representative is acting solely as agent of the licensed principal in the handling of such money;
          (g) The conditions for cancellation, which cannot alter or cancel the continuing responsibility of the licensed firm to take responsibility for the representative's action and conduct (without prejudice to any rights to bring actions for damages by the licensed firm against the representative or vice versa); and
          (h) That the appointed representative is prohibited from carrying on agencies with other licensed principals for the same type of business, in accordance with Paragraph GR-9.1.4, or may do so in accordance with Paragraph GR-9.1.4A, for conventional and Takaful insurance.
          Amended: October 2009
          Amended: July 2007

        • GR-9.1.9

          The powers of access given to the CBB and the licensed principal's auditors by Sub-paragraph GR-9.1.8 (e) are in order to ensure that the agency between the licensed principal and the appointed representative does not impede the effective supervision of the licensed principal by the CBB.

          Amended: July 2007

        • GR-9.1.10

          Once appointed, the licensed principal must take full responsibility for the actions and conduct of the appointed representative, in respect of any matters of compliance with, or breach of, the requirements of the CBB Rulebook that relate to activities of the appointed representative acting within the real or implied authority of the licensed principal. This is without prejudice to any rights of redress the licensed principal may have at law against the appointed representative.

          Amended: July 2007

        • GR-9.1.11

          The licensed principal must ensure that the appointed representative complies with the provisions of the CBB Rulebook applicable to the activities being undertaken in accordance with the agency, including, but not limited to:

          (a) Record-keeping;
          (b) Business conduct; and
          (c) Financial crime requirements.
          Amended: July 2007

        • GR-9.1.12

          The licensed principal must ensure that periodic monitoring of the appointed representative is undertaken to ensure the adequacy of the systems and controls in place. The licensed principal or an appropriately qualified independent party may undertake this monitoring.

        • GR-9.1.13

          All appointments of appointed representatives, variations in terms of appointment and cancellations of appointment must be notified in writing to the CBB no later than 5 working days after they have taken place. Such notifications must be addressed to the Director, Licensing Directorate.

          Amended: April 2020
          Amended: October 2009
          Amended: July 2007

        • GR-9.1.14

          An appointed representative must at all times act within the limits of his authority in the conduct of activities covered by the terms of the agency agreement.

        • GR-9.1.15

          An appointed representative must disclose to clients the relationship that he has with the licensed principal and any other parties that could reasonably be considered material to the insurance contract.