COBS 7.11 COBS 7.11 Insurance Monies
COBS 7.11.1 Application
This section applies to an Insurance Intermediary and an Insurance Manager, in respect of activities carried on in or from the Abu Dhabi Global Market.
COBS 7.11.2 General(a) Insurance Monies are any monies arising from Insurance Intermediation or the Insurance Management business which are any of the following:(i) premiums, additional premiums and return premiums of all kinds;(ii) claims and other payments due under Contracts of Insurance;(iii) refunds and salvages;(iv) fees, charges, taxes and similar fiscal levies relating to Contracts of Insurance payable to a Person other than the Insurance Intermediary or Insurance Manager;(v) discounts, commissions and brokerage payable to a Person other than the Insurance Intermediary or Insurance Manager; or(vi) monies received from or on behalf of a Client of an Insurance Manager, in relation to his Insurance Management business.(b) Monies are not Insurance Monies where there is a written agreement in place between the Insurance Intermediary or Insurance 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:(i) the Insurance Intermediary or Insurance Manager, as the case may be, holds as agent for the insurer all monies received by it in connection with Contracts of Insurance effected or to be effected by the insurer;(ii) insurance cover is maintained for the Client once the monies are received by the Insurance Intermediary or the Insurance Manager, as the case may be; and(iii) the insurer's obligation to make a payment to the Client is not discharged until actual receipt of the relevant monies by the Client.
In this section, a Client of an Insurance Manager means:(a) any insurer for which the Insurance Manager provides Insurance Management;(b) any shareholder of an insurer mentioned in Rule 7.11.3(a); or(c) any Person on whose behalf the Insurance Manager undertakes to establish that Person as an insurer.
For the purposes of Rule 7.11.3:(a) an Insurer includes a Cell of a Protected Cell Company which is an Insurer; and(b) a shareholder includes a holder of Cell Shares.
COBS 7.11.5 Pooling Event
Following a Pooling Event, an Authorised Person must comply with the Rules in Rule 14.4 and all Money will also be subject to such Rules in the same way as Client Money.
COBS 7.11.6 Insurance Money Segregation
An Insurance Intermediary or Insurance Manager when dealing with Insurance Monies must:(a) maintain one or more separate Insurance Bank Accounts with an Eligible Bank in the U.A.E.;(b) ensure that each Insurance Bank Account contains in its title the name of the Authorised Person, together with the designation Insurance Bank Account (or IBA);(c) prior to operating an Insurance Bank Account, give written notice to, and receive written confirmation from, the Eligible Bank that the bank is not entitled to combine the Insurance Bank Account with any other account unless that account is itself an Insurance Bank Account held by the Authorised Person, or to any charge, encumbrance, lien, right of set-off, compensation or retention against monies standing to the credit of the Insurance Bank Account;(d) pay all Insurance Monies directly and without delay into an Insurance Bank Account;(e) use an Insurance Bank Account only for the following purposes:(i) the receipt of Insurance Monies;(ii) the receipt of such monies as may be required to be paid into the Insurance Bank Account to ensure compliance by the Authorised Person with any conditions or requirements prescribed by the Regulator;(iii) the payment to Clients or to insurers of monies due under Insurance Intermediation Business transactions;(iv) the payment of all monies payable by the Authorised Person in respect of the acquisition of or otherwise in connection with approved Assets;(v) the withdrawal of brokerage, management fees and other income related to Insurance Intermediation Business, either in cash or by way of transfer to an account in the name of the Intermediary which is not an Insurance Bank Account, provided that no such sum may be withdrawn from the Insurance Bank Account before the time at which that amount may be brought into account as income of the Insurance Intermediary;(vi) the withdrawal of monies paid into the Insurance Bank Account in error; and(vii) the withdrawal of any monies credited to the Insurance Bank Account in excess of those required by any conditions and requirements prescribed by the Regulator;(f) ensure that any amount held in the Insurance Bank Account or other Approved 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.
An Insurance Intermediary or Insurance Manager may not obtain a loan or overdraft for any purpose relating to an Insurance Bank Account unless that advance:(a) is on a bank account which is designated as an Insurance Bank Account, and the loan or overdraft is used for payment to Clients or to insurers of monies due under Insurance Intermediation transactions;(b) does not give rise to a breach of the requirements of Rule 7.11.6(e); and(c) is of a temporary nature and is repaid as soon as reasonably practicable.
An Insurance Intermediary or Insurance Manager must hold Insurance Monies either in an Insurance Bank Account or in Approved Assets.
An Insurance Intermediary must ensure that Approved Assets are:(a) registered in the name of the Insurance Intermediary or Insurance Manager and designated "Insurance Bank Account"; or(b) held for the Insurance Bank Account of the Insurance Intermediary or Insurance Manager at the bank at which such Insurance Bank Account is held.
An Insurance Intermediary or Insurance Manager must ensure that monies, other than interest, arising from Approved Assets or their realisation, sale or disposal are paid into an Insurance Bank Account.
An Insurance Intermediary or Insurance Manager may not hold Insurance Monies in Approved Assets until it has given written notice to and received written notice from the bank referred to in Rule 7.11.9(b) that the bank is not entitled to any charge, encumbrance, lien, right of set-off, compensation or retention against Approved Assets held for the Insurance Intermediary's or Insurance Manager's Insurance Bank Account.
An Insurance Intermediary or Insurance Manager may only use Approved Assets as security for a loan or overdraft where that loan or overdraft is for a purpose relating to an Insurance Bank Account as permitted by Rule 7.11.7.
Where Insurance Monies are held in Approved Assets whose rating drops below the minimum stipulated within the definitions, that investment or asset will cease to be an Approved Asset and the Insurance Intermediary or Insurance Manager must dispose of the investment or asset as soon as possible and no later than within thirty days of the rating change.
An Insurance Intermediary or Insurance Manager may not use derivatives in the management of Insurance Monies except for the prudent management of risks.
An Insurance Intermediary who has a credit balance for a Client who cannot be traced must not take credit for such an amount except where:(a) he has taken reasonable steps to trace the Client and to inform him that he is entitled to the money;(b) at least six years has passed from the date the credit was initially notified to the Client; and(c) Rule 7.11.6(f) will continue to be satisfied after the withdrawal of such money.
An Insurance Intermediary must keep records of all sums withdrawn from the Insurance Bank Account or realised Approved Assets as a result of credit taken under Rule 7.11.15 for at least six years from the date of withdrawal or realisation.