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  • GR-9 GR-9 Professional Indemnity Coverage

    • GR-9.1 GR-9.1 Key Provisions

      • GR-9.1.1

        Category 2 investment firms and Category 3 investment firms must maintain professional indemnity coverage. The professional indemnity coverage must be obtained from an insurance firm acceptable to the CBB and licensed in the Kingdom of Bahrain. Category 2 investment firms and Category 3 investment firms must submit a Professional Indemnity Insurance Return (Form PIIR) on a quarterly basis as part of the Quarterly Prudential Return Form (ref. BR-1.1). Additionally, they must provide, upon request, evidence to the CBB of the coverage in force.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.1A

        In accordance with Paragraph EN-B.3.1, investment firm licensees may not enter into or make a claim under a contract of insurance that is intended to, or has the effect of, indemnifying them from the financial penalties provided for in Module EN.

        Adopted: April 2008

      • GR-9.1.2

        The requirement to maintain professional indemnity coverage will normally be met by the investment firm licensee concerned obtaining an insurance policy from an insurance firm. The CBB may also accept an insurance indemnity policy issued at group level, e.g. issued with respect to the parent of the investment firm licensee, provided the terms of the policy explicitly provide indemnity coverage with respect to the investment firm licensee. Similarly, overseas investment firm licensees may provide evidence of professional indemnity coverage maintained by their head office, providing that the coverage of the professional indemnity extends to the operations of the branch operating in Bahrain.

        Amended: April 2008
        Amended: July 2007

      • GR-9.1.3

        Upon written application to the CBB, the requirement in Rule GR-9.1.1 may instead be met by the investment firm licensee depositing with a retail bank licensed to operate in the Kingdom of Bahrain, an amount, specified by the CBB, to be held in escrow against future claims. This amount will not be less than the minimum required policy limit.

        Amended: July 2007

      • GR-9.1.4

        An investment firm licensee must assess its insurance needs with respect to professional indemnity to ensure its adequacy to the level of business undertaken, notwithstanding the minimum limit of indemnity.

        Adopted: October 2009

      • GR-9.1.5

        The minimum limit of indemnity is BD 100,000 for Category 2 investment firms and BD 75,000 for Category 3 investment firms.

        Amended: October 2009

      • GR-9.1.6

        The maximum excess or deductible allowable under the policy shall be BD 15,000.

        Amended: October 2009

      • GR-9.1.7

        Unless otherwise agreed in writing with the CBB, the policy must contain a clause that it may not be cancelled or lapsed without the prior notification of the CBB. The policy must also contain a provision for an automatic extended reporting period in the event that the policy is cancelled or lapsed, such that claims relating to the period during which the policy was in force may subsequently still be reported.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.8

        If a Category 2 investment firm or Category 3 investment firm applies to the CBB for a voluntary surrender of its authorisation, it must ensure that suitable arrangements are in place for professional indemnity coverage to continue in respect of any unreported claims arising from past sales or advice.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.9

        The CBB will not allow a voluntary surrender of authorisation to take effect until the investment firm licensee, in the opinion of the CBB, has discharged all its regulatory responsibilities to its clients. See also Section AU-5.5, on the cancellation of authorisation.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.10

        As provided for in Module ES, professional indemnity coverage requirements must be met by Category 2 investment firms and Category 3 investment firms, which were licensed prior to the introduction of Volume 4 (Investment Business) in April 2006, by December 31, 2006. Category 2 investment firms and Category 3 investment firms licensed after April 2006 are required to comply with the CBB's professional indemnity coverage requirements, from the point they are given a license.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.11

        Category 2 investment firms and Category 3 investment firms must prominently display in their premises a notice stating that they have in place professional indemnity coverage that meets the minimum requirements of the CBB and the period of coverage, such that claims relating to the period during which the policy was in force may subsequently still be reported.

        Amended: October 2009
        Amended: July 2007

      • GR-9.1.12

        The above notice may either be issued by the insurance company on behalf of the investment firm licensee, or by the licensee itself. The notice should specify the main features of the coverage maintained (or, where relevant, the amount of funds placed in escrow, in accordance with Rule GR-9.1.3). It should also specify the procedures for submitting a claim under the coverage maintained.

        Amended: October 2009
        Amended: July 2007