Entire Section
COB 7.12 COB 7.12 Insurance Monies
Application
COB 7.12.1
This section applies to an
Insurance Intermediary and anInsurance Manager , in respect of activities carried on in or from the DIFC.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]General
COB 7.12.2 COB 7.12.2
(1)Insurance Monies are, subject to (2), any monies arising fromInsurance Intermediation or theInsurance Management business which are any of the following:(a) premiums, additional premiums and return premiums of all kinds;(b) claims and other payments due underContracts ofInsurance ;(c) refunds and salvages;(d) fees, charges, taxes and similar fiscal levies relating toContracts ofInsurance ;(e) discounts, commissions and brokerage; or(f) monies received from or on behalf of aClient of anInsurance Manager , in relation to hisInsurance Management business.(2)Monies are notInsurance Monies where there is a written agreement in place between theInsurance Intermediary orInsurance Manager and the insurer to whom the relevant monies are to be paid (or from whom they have been received) under which the insurer agrees that:(a) theInsurance Intermediary orInsurance Manager , as the case may be, holds as agent for the insurer all monies received by it in connection withContracts ofInsurance effected or to be effected by the insurer;(b) insurance cover is maintained for theClient once the monies are received by theInsurance Intermediary or theInsurance Manager , as the case may be; and(c) the insurer's obligation to make a payment to theClient is not discharged until actual receipt of the relevant monies by theClient .Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.2 Guidance
If an
Insurance Manager does not have in place risk transfer arrangements referred to in COB Rule 7.12.2(2), theInsurance Manager holdsInsurance Monies , so far as they belong toPolicyholders , at the risk of thosePolicyholders .Derived from DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]COB 7.12.3 [Deleted]
[Deleted] DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]COB 7.12.4 [Deleted]
[Deleted] DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]Insurance Money Segregation
COB 7.12.5
(1) AnInsurance Intermediary orInsurance Manager when dealing withInsurance Monies must:(a) maintain one or more separateInsurance Bank Accounts with anEligible Bank ;(b) ensure that eachInsurance Bank Account contains in its title the name of theAuthorised Firm , together with the designationInsurance Bank Account (or IBA);(c) prior to operating anInsurance Bank Account , give written notice to, and request written confirmation from, theEligible Bank that the bank is not entitled to combine theInsurance Bank Account with any other account unless that account is itself anInsurance Bank Account held by theAuthorised Firm , or to any charge, encumbrance, lien, right of set-off, compensation or retention against monies standing to the credit of theInsurance Bank Account ;(d) pay allInsurance Monies directly and without delay into anInsurance Bank Account ;(e) use anInsurance Bank Account only for the following purposes:(i) the receipt ofInsurance Monies ;(ii) the receipt of such monies as may be required to be paid into theInsurance Bank Account to ensure compliance by theAuthorised Firm with any conditions or requirements prescribed by the DFSA;(iii) the payment toClients or to insurers of monies due underInsurance Intermediation Business transactions;(iv) the payment of all monies payable by theAuthorised Firm in respect of the acquisition of or otherwise in connection withApproved Assets ;(v) the withdrawal of brokerage, management fees and other income related toInsurance Intermediation Business , either in cash or by way of transfer to an account in the name of theIntermediary which is not anInsurance Bank Account , provided that no such sum may be withdrawn from theInsurance Bank Account before the time at which that amount may be brought into account as income of theInsurance Intermediary ;(vi) the withdrawal of monies that are required to be transferred under (2) or COB Rule 7.12.9A;(vii) the withdrawal of monies paid into theInsurance Bank Account in error; and(viii) the withdrawal of any monies credited to theInsurance Bank Account in excess of those required by any conditions and requirements prescribed by the DFSA;(f) ensure that any amount held in theInsurance Bank Account or otherApproved Assets , together with any amount due and recoverable from insurance debtors, is equal to, or greater than the amount due to insurance creditors; and(g) take immediate steps to restore the required position if at any time it becomes aware of any deficiency in the required segregated amount.(2) If anEligible Bank has not provided the written confirmation referred to in (1)(c) within 40 business days after theAuthorised Firm made the request, theAuthorised Firm must as soon as possible withdraw Insurance Monies held in theInsurance Bank Account with thatEligible Bank and deposit them in an Insurance Bank Account with another Eligible Bank.(3) An Insurance Intermediary orInsurance Manager is not required to comply with the requirement in (1)(c) if it has no account, other than one or moreInsurance Bank Accounts , with theEligible Bank .Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
[Amended] DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]COB 7.12.6
An
Insurance Intermediary orInsurance Manager may not obtain a loan or overdraft for any purpose relating to anInsurance Bank Account unless that advance:(a) is on a bank account which is designated as anInsurance Bank Account , and the loan or overdraft is used for payment toClients or to insurers of monies due underInsurance Intermediation transactions;(b) does not give rise to a breach of the requirements of COB Rule 7.12.5(e); and(c) is of a temporary nature and is repaid as soon as reasonably practicable.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.7
An
Insurance Intermediary orInsurance Manager must holdInsurance Monies either in anInsurance Bank Account or inApproved Assets .Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.8
An
Insurance Intermediary orInsurance Manager must ensure thatApproved Assets are:(a) registered in the name of theInsurance Intermediary orInsurance Manager and designated as being an 'Insurance Bank Account'; or(b) held for theInsurance Bank Account of theInsurance Intermediary orInsurance Manager at the bank at which suchInsurance Bank Account is held.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
[Amended] DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]COB 7.12.9
An
Insurance Intermediary orInsurance Manager must ensure that monies, other than interest, arising fromApproved Assets or their realisation, sale or disposal are paid into anInsurance Bank Account .Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.9A
(1) AnInsurance Intermediary orInsurance Manager must not holdInsurance Monies for aClient in anInsurance Bank Account with anEligible Bank outside theState , unless it has previously disclosed in writing to theClient :(a) that the money may be held in anInsurance Bank Account outside theState ;(b) that in such circumstances, the legal and regulatory regime applying to theEligible Bank may be different from that in theState ;(c) in the event of failure of theEligible Bank , the money may be treated in a different way to that which would apply if the money were held by a bank in theState ;(d) if it is the case, that the particularEligible Bank has not accepted that it has no right of set-off or counterclaim against money held in theInsurance Bank Account in respect of any sum owed on any other account of theAuthorised Firm ; and(e) that theClient may notify theAuthorised Firm if he does not wish the money to be held in anInsurance Bank Account outside theState or in a particular jurisdiction.(2) If aClient notifies anInsurance Intermediary orInsurance Manager in writing that he does not wish theInsurance Monies to be held in anInsurance Bank Account outside theState or in a particular jurisdiction, the Insurance Intermediary or Insurance Manager must ensure that, no later than 20 days after receiving the notice, either:(a) theInsurance Monies are transferred into anInsurance Bank Account with anEligible Bank in theState , or in a jurisdiction to which theClient has not objected, as the case may be; or(b) if no such alternative arrangement can be made, theInsurance Monies are returned to theClient .Derived from DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]COB 7.12.10
An
Insurance Intermediary orInsurance Manager may not holdInsurance Monies inApproved Assets until it has given written notice to and received written notice from the bank referred to in COB Rule 7.12.8(b) that the bank is not entitled to any charge, encumbrance, lien, right of set-off, compensation or retention againstApproved Assets held for theInsurance Intermediary's orInsurance Manager's Insurance Bank Account .Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.11
An
Insurance Intermediary orInsurance Manager may only useApproved Assets as security for a loan or overdraft where that loan or overdraft is for a purpose relating to anInsurance Bank Account as permitted by COB Rule 7.12.6.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.12
Where
Insurance Monies are held inApproved Assets whose rating drops below the minimum stipulated within the definitions, that investment or asset will cease to be anApproved Asset and theInsurance Intermediary orInsurance Manager must dispose of the investment or asset as soon as possible and no later than within 30 days of the rating change.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.13
An
Insurance Intermediary orInsurance Manager may not use derivatives in the management ofInsurance Monies except for the prudent management of foreign exchange risks.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.14
An
Insurance Intermediary who has a credit balance for aClient who cannot be traced should not take credit for such an amount except where:(a) he has taken reasonable steps to trace theClient and to inform him that he is entitled to the money;(b) at least six years from the date the credit was initially notified to theClient ; and(c) COB Rule 7.12.5(f) will continue to be satisfied after the withdrawal of such money.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]COB 7.12.15
An
Insurance Intermediary must keep records of all sums withdrawn from theInsurance Bank Account or realisedApproved Assets as a result of credit taken under COB Rule 7.12.14 for at least six years from the date of withdrawal or realisation.Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]