Law No. 125 of 2019 on Insurance Regulation

Contents (31)

1. Part One – General Provisions
2. Chapter One – Definitions
3. Chapter Two – Controls on the Practice of Insurance and Reinsurance
4. Part Two – The Insurance Regulatory Unit
5. Chapter One – Establishment of the Unit
6. Chapter Two – The Complaints Committee
7. Chapter Three – The Grievances Committee
8. Chapter Four – The Legal Department
9. Chapter Five – The Sharia Supervisory Advisory Committee
10. Part Three – Establishment and Registration of Insurance Companies, Reinsurance Companies and Insurance Pools
11. Part Four – Licensing to Carry On Insurance Business
12. Part Five – Takaful Insurance Companies
13. Part Six – Obligations of Companies Licensed to Carry On Insurance Activity
14. Chapter One – Financial Obligations
15. Chapter Two – Records and Accounts
16. Chapter Three – Obligations Relating to the Conduct of Life Insurance and Capital Formation Operations
17. Chapter Four – Obligation to Submit Other Information
18. Part Seven – Portfolio Transfer, Merger and Cessation of Business
19. Chapter One – Portfolio Transfer
20. Chapter Two – Merger
21. Chapter Three – Cessation of Business in One or More Classes of Insurance
22. Chapter Four – Suspension of Insurance Business
23. Chapter Five – Revocation of the Licence
24. Part Eight – Branches of Foreign Insurance Companies
25. Part Nine – Insurance Intermediaries and Insurance Professions
26. Chapter One – Insurance and Reinsurance Brokerage Companies
27. Chapter Two – Risk Assessors and Loss Adjusters
28. Chapter Three – Insurance Consultants and Actuaries
29. Part Ten – Penalties
30. Part Eleven – Violations and Discipline
31. Part Twelve – Final Provisions

Law No. 125 of 2019
on Insurance Regulation

Part One – General Provisions

Chapter One – Definitions

Article 1

The following words and expressions shall have the meaning assigned against each of them:
1- Competent Minister: the Minister of Commerce and Industry.
2- the Ministry: the Ministry of Commerce and Industry.
3- the Unit: the Insurance Regulatory Unit.
4- the Committee: the Higher Committee of the Unit.
5- Licensed companies: these include the following companies:
(a) Insurance companies:
Shareholding companies and branches of foreign companies licensed to carry on insurance business in accordance with the provisions of this Law.
(b) Reinsurance companies:
Shareholding companies and branches of foreign companies licensed to carry on reinsurance business in accordance with the provisions of this Law.
(c) Takaful insurance companies:
Shareholding companies and branches of foreign companies licensed to carry on takaful insurance operations in accordance with the provisions of this Law.
(d) Takaful reinsurance companies:
Shareholding companies and branches of foreign companies licensed to carry on takaful reinsurance operations in accordance with the provisions of this Law.
(e) Branches of foreign insurance companies:
Branches of foreign insurance companies licensed to carry on insurance operations in the State of Kuwait.
(f) Insurance and reinsurance pools:
Agreements established between licensed companies for the purpose of managing a particular class of insurance or a particular operation in itself for a joint account.
6- Conventional insurance policy:
An insurance contract between the insurance company and the insured under which the insurance company undertakes, in consideration of an insurance premium, to indemnify the insured for the damage and losses covered thereunder or to pay the sum insured to the person insured or the beneficiaries on the basis of the insurance policy.
7- Takaful insurance policy:
An insurance contract that aims to achieve the principle of solidarity and cooperation among the participating members on the basis of their bearing the risks to which any of them is exposed and their cooperation in making good the actual damage, in accordance with the rules laid down in the articles of association of the company and the terms contained in the insurance policy.
8- Reinsurance:
The transfer by an insurance company of part or all of the risk it has underwritten to another insurance company or to a reinsurance company.
9- Takaful reinsurance:
The transfer by a takaful insurance company of part or all of the risk it has underwritten to another takaful insurance company or to a takaful reinsurance company.
10- Policyholders:
(a) The insured under insurance policies in force.
(b) The participant: the person who is bound by a takaful insurance policy and undertakes to pay the contribution, and who, or whose heirs or assignee in the cases where assignment is permitted, is entitled to obtain the indemnity or benefits provided by the participants’ account in the company.
11- Insurance brokerage companies:
A company licensed to carry on the business of intermediation on behalf of policyholders with insurance companies.
12- Reinsurance brokerage companies:
A licensed company that acts as an intermediary between the insurance company and the reinsurance company, and the reinsurance broker, in its dealings with the reinsurance company, shall be the representative of the insurance company.
13- Insurance professions:
Actuaries, risk assessors and loss adjusters, insurance consultants and any other insurance professions specified by the Executive Regulations.
14- Insurance premium:
The amount paid by the insured to the insurance company in consideration of the insurance policy.
15- Contribution:
The consideration that the participant undertakes to pay to the participants’ fund in return for participating in the takaful insurance account of the company, for the purpose of indemnifying damage or paying benefits to those entitled thereto.
16- Deposit:
The insurance deposit which insurance companies and reinsurance companies are bound to maintain, either in cash deposited with one of the banks operating in Kuwait or in the form of other guarantees, as part of the coverage of the solvency margin.
17- Solvency margin:
The excess of the value of the actual assets of the company over its liabilities, such as to enable it to meet its obligations in full and to pay the indemnity amounts required of it as soon as they fall due without this leading to the faltering of the company’s business or the weakening of its financial position, in accordance with generally accepted international standards and any other standards specified by the Executive Regulations.
18- Mathematical reserve:
A separate account which licensed companies (insurance companies and reinsurance companies) are bound to allocate for each class of insurance they carry on, and they may be required to allocate it for one or more types of insurance falling within a single class. It may take one of the forms of the deposit.
19- Technical provisions:
The provisions which licensed companies shall set aside and maintain as a guarantee to cover the financial obligations incumbent upon them towards policyholders under the provisions of this Law.
20- Qard hasan (interest-free loan):
Interest-free financial support which the takaful insurance company is bound to provide to the participants’ account when the participants are exposed to an insurance deficit.

Chapter Two – Controls on the Practice of Insurance and Reinsurance

Article 2

The following companies and insurance professions shall be subject to the provisions of this Law:
(a) Insurance companies and reinsurance companies.
(b) Takaful insurance companies and takaful reinsurance companies.
(c) Local insurance and reinsurance pools.
(d) Branches of foreign insurance companies.
(e) Insurance and reinsurance brokerage companies.
(f) Insurance professions specified by the Executive Regulations.

Article 3

The provisions of this Law shall apply to the following insurance and reinsurance activities:
1- Life insurance and capital formation operations.
2- General and property insurance.
3- Liability insurance.
4- All other types and classes of insurance as the Unit deems fit.
The Executive Regulations shall specify the conditions and controls of these types of insurance.

Article 4

Contracting for any of the insurance activities referred to in Article (3) is prohibited except through one of the insurance companies or branches of foreign insurance companies licensed to carry on the insurance that is the subject of the contract.
Reinsurance activities of all types shall be excepted therefrom, in accordance with the controls specified by the Executive Regulations.

Part Two – The Insurance Regulatory Unit

Chapter One – Establishment of the Unit

Article 5

A unit called the (Insurance Regulatory Unit) shall be established, which shall be subject to the supervision of the Competent Minister and shall enjoy financial and administrative independence within the scope of the powers it exercises and in accordance with what is specified by the Executive Regulations.
Its Head and his Deputy shall be appointed by decree upon the proposal of the Competent Minister for a term of four years, renewable once, and the decree shall determine their remuneration.

Objectives of the Unit

Article 6

The Unit shall aim to achieve the following:
1- Regulating and supervising insurance activity in a manner characterised by fairness, transparency and competitiveness.
2- Developing insurance activity and its instruments in line with the best international practices.
3- Providing protection for those dealing in insurance activity.
4- Applying policies that achieve fairness and transparency and prevent conflicts of interest.
5- Working to ensure compliance with the laws and regulations relating to insurance activity.
6- Raising public awareness of insurance activity and the benefits, risks and obligations associated with it, and encouraging its development.

The Higher Committee

Article 7

The Committee shall be formed under the chairmanship of the Head of the Unit and with the membership of:
(a) The Deputy Head of the Unit.
(b) Three non-full-time members appointed by a resolution of the Competent Minister for a term of four years, renewable once, and the resolution shall determine their remuneration.
(c) A representative of the Central Bank of Kuwait.
(d) A representative of the Ministry of Commerce and Industry.
Provided that the grade of the two members referred to in Clauses (c) and (d) shall not be lower than the grade of Assistant Undersecretary or its equivalent.

Article 8

A member of the Committee shall be a Kuwaiti natural person of integrity and with expertise in the insurance, financial or legal field, and shall not have been the subject of a final judgment declaring him bankrupt or imposing a custodial penalty for a felony or for a crime involving moral turpitude or dishonesty.
The Head of the Unit and his Deputy shall have expertise in the field of insurance or finance, and shall have worked in the field of insurance or finance for a period of not less than ten years.

Article 9

The membership of any of the members of the Committee shall terminate in the following cases:
(a) Resignation, or replacement of the member by the entity that nominated him.
(b) If he is absent from three consecutive meetings or four non-consecutive meetings within one year without an excuse acceptable to the Committee.
(c) If he loses any of the conditions of membership provided for in this Law.

Powers of the Higher Committee

Article 10

The Committee shall be responsible for all matters relating to the development and advancement of insurance activity and its supervision, and in particular:
1- Examining and studying applications for the incorporation of insurance and reinsurance companies, and of takaful insurance and takaful reinsurance companies.
2- Granting licences to carry on insurance activities to those who meet the conditions for carrying them on.
3- Regulating the ancillary services of the insurance sector.
4- Applying international standards for the supervision of the insurance sector.
5- Approving the financial and administrative structure of the Unit.
6- Carrying out supervision and inspection procedures over companies operating in the insurance sector of all types.
7- Approving the rules, regulations and procedures governing the granting and revocation of licences to carry on insurance and reinsurance activities and the supporting professions.
8- Ensuring that licensed companies comply with all local and international rules relating to insurance activity.
9- Protecting the rights of policyholders and beneficiaries of insurance activities and monitoring the solvency of companies in order to provide adequate insurance cover to protect these rights.
10- Working to raise the performance and efficiency of licensed companies and to bind them to the rules of governance and the rules and ethics of professional practice, in order to increase their ability to provide better services to the beneficiaries of insurance and to achieve positive competition among them.
11- Working to provide qualified human resources to practise insurance activities, including establishing an institute for this purpose, and participation and cooperation in this regard with the competent entities may take place, in accordance with the provisions of the legislation in force.
12- Approving programmes and plans for the development of the insurance sector in all fields, working to develop insurance awareness, and preparing and disseminating studies and research relating to insurance activity.
13- Specifying the funds that shall be maintained and the bases and controls of their investment.
14- Strengthening ties of cooperation and integration with similar bodies regulating and supervising the insurance sector at the Arab and international levels.
15- Specifying the risks for which insurance shall be compulsory.
16- Establishing an insurance database that organises the insurance operations carried out by licensed companies; the Executive Regulations shall specify the mechanisms, controls and manner of supplying this database with the data that the Unit requests from the companies concerned, and of making it available for inspection by every interested party.
17- Imposing fees commensurate with the service provided, in accordance with what is specified by the Executive Regulations of this Law.
18- Suspending or revoking the licence of any licensed company whose liquidity or solvency is exposed to risk, in accordance with the procedures specified in this Law and its Executive Regulations.
19- Approving the liquidation of companies licensed under this Law.
20- Establishing rules for combating money laundering and the financing of terrorism in insurance activities in cooperation with the competent entities.
21- Preparing the Executive Regulations of this Law and any amendments thereto.
22- Any other tasks relating to the regulation of the insurance sector as determined by the Unit.

Article 11

The Committee shall meet at least six times a year at the invitation of the Chairman, or of his Deputy in his absence, and it may be called to a meeting at the request of the Chairman or of at least three of the members of the Committee.
The Committee shall have a secretary from among the employees of the Unit, and the meetings of the Committee shall be recorded in minutes signed by the members present and the secretary.
For a meeting of the Committee to be valid, a majority of its members shall be present, provided that they include the Chairman or his Deputy, and resolutions shall be passed by an absolute majority of the votes of those present; in the event of a tie, the side of the Chairman shall prevail.
The Committee may invite to attend its meetings such experts and consultants on the subject of the meeting as it deems fit to seek assistance from, without the right to vote when resolutions are taken.
The Committee may also establish temporary advisory committees, to be entrusted with studying a particular matter falling within the powers specified in this Law.

Article 12

The Head of the Unit shall manage its business, shall be the legal representative of the Unit and shall be responsible for implementing and following up the resolutions issued by the Committee, and he shall in particular have the following powers:
1- Implementing the policies, plans and programmes approved by the Committee.
2- Proposing the administrative and financial structure of the Unit and supervising it so as to ensure the proper conduct of the Unit’s business.
3- Preparing programmes and plans for the development of the insurance sector and the raising of the standard of its services, for submission to the Committee.
4- Preparing draft laws, regulations, rules, instructions and resolutions issued under the provisions of this Law and relating to insurance activities, and submitting them to the Committee.
5- Issuing the necessary resolutions that he is empowered to issue under the provisions of this Law.
Any other powers entrusted to him by the Committee.

Article 13

The Committee shall lay down the administrative and financial structure for the employees appointed to work therein, including the rules on appointment, promotions, salaries and in-kind and cash remuneration, by way of exception from the Civil Service Law and its System, and the latter Law and its System shall apply to matters for which no special provision is made in this regard.

Article 14

Members of the Higher Committee, members of the committees affiliated with the Unit and employees of the Unit are prohibited from carrying out any commercial activity related to insurance business, whether on their own behalf or in their capacity as agent, guardian or testamentary guardian, from providing any services or consultancy, directly or indirectly, and from holding membership of the board of directors of any entity subject to the supervision of the Unit or of any entity related thereto.

Article 15

The revenues of the Unit shall consist of the following resources:
1- Any amounts allocated by the Government to the Unit.
2- The fees collected by the Unit, as determined by the Executive Regulations pursuant to Article (18) of this Law.
3- The financial penalties imposed in accordance with the provisions of this Law.
4- 10% of the surplus of the preceding financial year, provided that the remainder of the surplus derived from fees and services is transferred to the State Public Treasury.

Article 16

The Unit shall have an independent budget, which shall be issued by law and prepared in accordance with the rules and provisions of Decree-Law No. (31) of 1978 on the Rules for Preparing General Budgets, Supervising their Implementation and the Final Account.
The financial year of the Unit shall begin on the first of April and end on the thirty-first of March of each year, except for the first financial year, which shall begin on the date on which the provisions of this Law come into force and end at the end of March of the following year.

Article 17

1- The funds of the Unit shall be deemed public funds.
2- The Unit shall enjoy the exemptions and facilities enjoyed by ministries and government departments.
3- The Unit shall keep appropriate books of account and records of its revenues, expenditures, assets and liabilities and of all transactions of the Unit. The Unit shall have one or more independent auditors, and the Executive Regulations shall determine the conditions and controls to be satisfied by them.

Article 18

The Executive Regulations shall determine the fees for the services provided by the Unit and for the licences of companies.

Chapter Two – The Complaints Committee

Article 19

A Complaints Committee shall be established within the Unit, and any interested party may submit to it a complaint concerning any error committed by any of the licensed companies.
The Executive Regulations shall regulate the formation of the Complaints Committee and its working mechanism.

Chapter Three – The Grievances Committee

Article 20

A Grievances Committee shall be established for grievances against decisions of the Unit, attached to the Competent Minister, and consisting of five members who are experts specialised in the fields of insurance, law and finance, to be named by a decision of the Competent Minister for a non-renewable term of three years.
The Grievances Committee shall examine the grievances submitted to it, decide on them and issue a binding decision on each grievance within seven working days of the grievance being submitted to it, and the Unit shall be notified of the decision for implementation.
Any concerned party may file a grievance before the Grievances Committee against decisions of the Unit within thirty working days of the date of their publication or of the concerned parties being notified of them, whichever is earlier.
The Unit shall provide the Grievances Committee with the documents and information relating to the grievance submitted to the Grievances Committee immediately upon its request.
The Minister’s decision shall determine the remuneration of the members of the Grievances Committee, the rules of work of the Grievances Committee, the procedures for submitting, examining and deciding on grievances, and the manner in which the grievant and the Unit are notified of its decisions.

Chapter Four – The Legal Department

Article 21

By way of exception from the provisions of Article (2) of Amiri Decree No. (12) of 1960 and the provisions of Article (10) of Decree-Law No. (38) of 1980, referred to above, the Unit shall have a Legal Department reporting to the Head of the Unit, which shall handle all cases and appear before all courts and arbitral tribunals, or give legal opinions and conduct investigations, and all litigation papers in lawsuits or appeals and all judgments issued shall be served on it.

Chapter Five – The Sharia Supervisory Advisory Committee

Article 22

A Sharia Supervisory Advisory Committee shall be established by a decision of the Higher Committee, and it shall be the reference in all matters relating to decisions of the Unit in the field of activities compliant with the provisions of Islamic Sharia.
The Sharia Supervisory Advisory Committee shall consist of at least five non-full-time members who are experts specialised in the jurisprudence of Islamic financial transactions, insurance, law and economics, provided that the majority of the members of this committee are specialists in Islamic Sharia. The Higher Committee shall issue a decision naming them for a term of two years, renewable once.
The Executive Regulations shall determine its powers, its rules of work and the remuneration of its members.

Part Three – Establishment and Registration of Insurance Companies, Reinsurance Companies and Insurance Pools

Article 23

Without prejudice to the provisions of the Companies Law referred to above, an insurance and reinsurance company shall take the form of a shareholding company, and its issued capital shall not be less than the following:
1- A company engaged in life insurance: five million Kuwaiti dinars.
2- A company engaged in general insurance and liability insurance: five million Kuwaiti dinars.
3- A company engaged in life insurance, general insurance and liability insurance: ten million Kuwaiti dinars.
4- A company engaged in conventional or takaful reinsurance activities: fifteen million Kuwaiti dinars.
In all cases, the issued capital shall be paid in full upon incorporation.
The minimum issued capital may be increased by a decision of the Unit.

Article 24

An application for the incorporation of a company shall be submitted to the Unit on the form prepared for this purpose, accompanied by the documents and information specified by the Executive Regulations, and a decision of the Unit shall be issued on a complete application within thirty days of the date of its submission.
If the application is rejected, the decision of rejection shall state the reasons on which it is based.
A person whose application is rejected may file a grievance within the time limits and in accordance with the procedures specified in the Executive Regulations.

Article 25

Insurance and reinsurance companies may establish among themselves an insurance pool for the purpose of managing a particular class of insurance or a particular operation for a joint account. The Executive Regulations shall determine the procedures for establishing the pool and the obligations arising therefrom, and a special register shall be established at the Unit in which all pools established in accordance with the provisions of this Law shall be recorded.

Part Four – Licensing to Carry On Insurance Business

Article 26

A company may not carry on its business until it has been registered in the Commercial Register and has obtained a licence from the Unit to carry on business.
This licence shall be renewed every three years upon payment of the prescribed fees, provided that the application for renewal is submitted on the form prepared for that purpose not less than three months before the expiry of the licence. A register of companies licensed to carry on insurance business shall be established at the Unit.

Article 27

An insurance company may, after obtaining the approval of the Unit, open one or more branches inside or outside Kuwait, and a branch may not carry on its business until it has satisfied the conditions set out in this Law and the Executive Regulations.
The company shall be responsible for the business of all its branches and for providing the Unit with all data and information relating to them.

Part Five – Takaful Insurance Companies

Article 28

Takaful insurance companies established in accordance with the provisions of this Law shall, in conducting their business, comply with all laws and decisions issued in this regard, in a manner that does not conflict with the principles and provisions of Islamic Sharia.
The Executive Regulations shall determine the types of takaful insurance and regulate its provisions.

Article 29

Other insurance companies may, after obtaining the approval of the Unit, amend their memorandum of incorporation so as to engage in takaful insurance activity, after satisfying the conditions set out in this Law and its Executive Regulations.
Takaful insurance activity may not, in any form whatsoever, be combined with other insurance, or vice versa.

Part Six – Obligations of Companies Licensed to Carry On Insurance Activity

Chapter One – Financial Obligations

Article 30

Licensed companies shall place a deposit with one or more of the banks operating in Kuwait as security for the fulfilment of their insurance obligations, and the minimum value of the deposit shall be as follows, plus 20% of total premiums:
1- Five hundred thousand Kuwaiti dinars for insurance companies engaged in life insurance business and its classes.
2- Five hundred thousand Kuwaiti dinars for insurance companies engaged in general insurance business and its classes.
3- One million Kuwaiti dinars for insurance companies engaged in life insurance business and general insurance business and their classes.
4- One million Kuwaiti dinars for companies engaged in reinsurance business.
The amounts of the deposit referred to above may be increased in accordance with the controls determined by the Executive Regulations.

Article 31

The deposit shall take the form of cash, and it may be in the form of securities, a bank guarantee from one of the banks operating in Kuwait, or a mortgage over real property located in Kuwait.
The Executive Regulations shall determine the shares, bonds, bank guarantees, sukuk and mortgages that may be provided as a deposit, their value, the manner in which they are valued and periodically revalued, and the proportion of the deposit to be held in cash.

Article 32

If the value of the deposit falls below the limit referred to in Article (30), for whatever reason, the company or branch shall pay the difference within a period not exceeding sixty days from the date on which the shortfall occurred, and the Unit may request from the bank with which the deposit is held any information or data it requires.

Article 33

The deposit shall be placed with a bank in the name of the company or branch and to the order of the Unit, and the returns on the deposit shall belong to the company. If the deposit takes the form of a mortgage over real property, it shall be registered in the name of the Unit in its official capacity in accordance with the provisions of the Real Estate Registration Law referred to above, and the company shall ensure that the registration is renewed within the time limits and shall bear the expenses of registration and renewal. Shares, bonds and sukuk shall be pledged in accordance with the provisions of the Law Establishing the Capital Markets Authority referred to above and in favour of the Unit. In all cases, the deposit may not be attached except for debts arising from insurance business carried on by the company or branch.

Article 34

The deposit may not be replaced or disposed of in any manner whatsoever except with the approval of the Unit. In cases of liquidation, cessation of business or portfolio transfer, disposal may not be authorised until it has been verified that the company or branch has fulfilled all obligations arising from insurance business.
If the deposit takes the form of a mortgage over real property, the registration may not be cancelled except in accordance with Article (997) of the Civil Code referred to above.

Article 35

Companies licensed to carry on insurance activity shall maintain a solvency margin and technical provisions that enable them to meet their financial obligations. The solvency margin and technical provisions shall be calculated at least once a year, and the company shall submit the relevant documents. The Executive Regulations shall set out the method of calculating the margin and the provisions and the conditions and procedures for verifying them.
The calculation of the solvency margin and technical provisions shall be reviewed once every three years by an independent audit firm accredited by the Unit.

Article 36

A company’s violation of the provisions of the preceding Article shall result in its being deemed unable to meet its obligations, unless the violation is remedied within a period not exceeding ninety days from the date of the violation.

Article 37

The company shall submit to the Unit a statement of the funds required to be maintained in Kuwait and of the forms and ratios of investment of policyholders’ rights, at the times and by the methods specified by the Executive Regulations.

Article 38

Licensed companies shall notify the Unit, within five working days at most, of all dispositions and final enforceable judgments which would create, transfer, modify or extinguish any real right in rem over immovable property, before their registration by law, and which relate to the funds required to be maintained pursuant to Article (35) of this Law.

Article 39

The policyholders and the beneficiaries of the policies concluded and performed by the company in Kuwait shall have a privilege over the funds maintained pursuant to Article (35) of this Law, which shall rank after the privilege established in paragraph (a) of Article (1074) of the Civil Code.

Chapter Two – Records and Accounts

Article 40

Companies licensed to carry on insurance activity shall allocate a separate account for each type of insurance they carry on.
The Unit may require the company to allocate a separate account for one or more classes of insurance falling within a single type.
The Executive Regulations shall specify the records which the company is required to keep.

Article 41

The financial year of companies licensed to carry on insurance activity shall begin on the first of January and end on 31 December of each year, except for new companies, whose first financial year shall begin from the date of their entry in the Commercial Register and end on 31 December of the same year. The company shall submit annually to the Unit, within the ninety days following the end of the financial year, its financial position approved by each of the Board of Directors, the auditor and the actuary.
The Executive Regulations shall specify the data which the company’s financial position is required to include.

Chapter Three – Obligations Relating to the Conduct of Life Insurance and Capital Formation Operations

Article 42

Companies licensed to carry on the insurance activity referred to in Clause (1) of Article (3) may not discriminate between policies of the same type with regard to the amount of profits distributed to policyholders or to the conditions of the policy, unless such discrimination results from a difference in the factors on the basis of which the insurance premium was calculated.
The following shall be excepted therefrom:
1- Reinsurance policies.
2- Policies relating to insurance among the members of a single family or a group of persons bound by a single profession or occupation.
3- Policies relating to sums insured whose coverage value is not less than one million dinars.

Article 43

Companies carrying on life insurance and capital formation business shall examine their financial positions relating to that class and shall value the existing liabilities of each of them, covering all operations concluded by the company in Kuwait and abroad, each separately, at least once every three years, by an actuary.
The company shall likewise do so whenever it wishes to determine the ratios of profits to be distributed to shareholders and policyholders.
The Unit may request that such valuation be carried out without being bound by the period referred to in the first paragraph, and the company shall send a copy of the examination report to the Unit.
If it becomes apparent to the Unit that the actuary’s report does not reflect the true financial position of the company, it may order the actuarial examination to be repeated by a neutral actuarial body. The Executive Regulations shall specify the timing and procedures of the examination.

Article 44

Companies carrying on life insurance and capital formation operations may not deduct any part of the funds of the mathematical reserve for distribution as profits to shareholders and policyholders or for the performance of any obligations other than those arising from the issue of insurance policies.
In this respect, the Unit may treat the company’s funds in Kuwait and abroad as a single whole. Profits shall be distributed from the surplus determined by the actuary in his report after carrying out the examination referred to in the preceding Article.

Article 45

Insurance companies carrying on life insurance and capital formation business may not lend to those responsible for the management of the company or to its employees, or guarantee them by any kind of guarantee. Excepted therefrom are loans granted against the security of life insurance policies, provided that the value of the loan granted does not exceed the surrender value of the policy.

Article 46

In the event of the bankruptcy or liquidation of companies carrying on life insurance and capital formation business, the share of each insurance policy whose term has not expired shall be valued at an amount equal to its mathematical reserve on the day of liquidation or upon the judgment declaring bankruptcy, in accordance with the legal and technical rules and principles applicable in this regard.

Chapter Four – Obligation to Submit Other Information

Article 47

Companies licensed to carry on insurance activity shall provide the Unit with the following:
1- Specimens of insurance policies, with the conditions, exclusions and endorsements they contain, and every amendment or change made thereto, provided that policies and documents submitted in a foreign language are accompanied by an official translation into Arabic.
2- Any other data or documents requested by the Unit.
The company shall state, on all its official papers and letters and on the advertisements, signboards or publications issued by it, the activity it is licensed to carry on, and shall also state its paid-up capital.
Any company is also prohibited from publishing any of the data required to be submitted unless approved by the Unit.

Part Seven – Portfolio Transfer, Merger and Cessation of Business

Chapter One – Portfolio Transfer

Article 48

The company may, after obtaining the approval of the Unit, transfer all its policies, together with the rights and obligations they include, in respect of all or some of the classes of insurance it carries on in Kuwait, to one or more other companies subject to the provisions of this Law.
The company shall submit an application to that effect to the Unit in accordance with the conditions and procedures specified by the Executive Regulations.
The application shall be published in the Official Gazette and in two local daily newspapers, one of which is issued in Arabic, in addition to any electronic means of the Unit. Such application shall include an invitation to the policyholders and other interested parties to submit their objections to the transfer to the Unit within a period not exceeding thirty days from the date of publication in the Official Gazette.

Article 49

If the Unit finds that the transfer of the company’s policies would not prejudice the rights of the holders of the policies concluded by the company in Kuwait, the beneficiaries thereof and the creditors, the Unit shall issue a decision approving the transfer, and the decision shall be published in the Official Gazette.
The rights and funds of the transferor company shall pass to the transferee company after the legal procedures prescribed in this regard have been taken.
The transferred funds shall be exempt from the fees prescribed for the transfer of ownership.
In the event of an objection to the transfer, the transfer shall be suspended until the objection is settled amicably or judicially. The Unit may issue its decision approving the transfer on condition that the transferor company provides a bank guarantee equal to the value of its obligations towards the objector. If judgment is given in favour of the objector, the amount due to him shall be paid out of the amount of the guarantee, and the remainder, if any, shall be returned to the company.

Chapter Two – Merger

Article 50

Without prejudice to the provisions of the aforementioned Companies Law, the provisions set out in Chapter One of this Part shall apply in the event of the merger of more than one insurance company.
Each of the companies wishing to merge shall submit a report approved by the auditor and by one of the actuaries registered in the Unit’s register, stating that the merger does not harm the rights of policyholders and beneficiaries and the rights of third parties in general. All the documents specified by the Executive Regulations shall be attached to such report.

Chapter Three – Cessation of Business in One or More Classes of Insurance

Article 51

If a company decides to cease carrying on its activity in one or more classes of insurance and to have its funds relating to the class or classes it seeks to cease released, it shall follow the provisions of Chapter One of this Part and shall submit to the Unit evidence that it has discharged all its obligations under all the policies it has issued in respect of the class or classes in which it has decided to cease its operations, or that it has transferred its policies to another company in the manner prescribed in the aforementioned Chapter.
The Unit shall issue a decision ceasing the carrying on of the activity of the class or classes if no one has submitted an objection thereto within the period referred to in Article (48) of this Law.

Chapter Four – Suspension of Insurance Business

Article 52

The Unit may suspend the company from carrying on new insurance activities in any of the following cases:
1- If the licensed company does not maintain the funds provided for in Article (35) of this Law, or if it does not invest them in the manner specified by Article (37) of this Law.
2- If the licensed company refrains from executing a final court judgment relating to its activities provided for in this Law.
3- If the licensed company violates the provisions of this Law and the regulations and decisions implementing it, or the aforementioned Companies Law, or any other law, or its articles of association.
4- If the licensed companies fail to settle their obligations within the periods specified in the Executive Regulations.
5- If the licensed company breaches its obligations provided for in Articles (30) and (32) of this Law.
6- If it becomes apparent to the Unit that the rights of policyholders are at risk of being lost.
7- If the company loses one of the conditions required for practising insurance activity in accordance with the provisions of this Law.

Article 53

The suspension decision shall be issued after the company has been notified by a process server to rectify the violations attributed to it within a period not exceeding thirty days from the date of notification. The decision shall state the reasons on which it is based and specify the period of suspension, and shall be published in the Official Gazette.
The company may file a grievance against the suspension decision in writing.
The company shall rectify the violations attributed to it during the period of suspension.

Article 54

A company in respect of which a suspension decision has been issued is prohibited from issuing new insurance policies or renewing or extending policies in force during the period of suspension.
All policies and their endorsements issued before the suspension shall remain in force, together with the rights, obligations and guarantees they include, and the company shall carry out the administrative work connected therewith.
The Unit may approve the company’s request to extend insurance policies in force if this is in the interest of the holders of such policies.
If the company rectifies the violations attributed to it, the Unit shall issue a decision permitting it to carry on its activity.

Chapter Five – Revocation of the Licence

Article 55

The Higher Committee may issue a reasoned decision revoking the company’s licence to practise insurance activity in the following cases:
1- If it becomes apparent that the entry in the register was made in violation of the provisions of this Law and its Executive Regulations.
2- If it is established that the company refrains from executing final judgments.
3- If a decision is issued approving the transfer of the policies issued by the company to another company in respect of all the operations it has carried on in Kuwait, in accordance with the provisions of this Law and its Executive Regulations.
4- If the company ceases carrying on its activity in Kuwait pursuant to the provisions of Article (51) of this Law.
5- If the company is declared bankrupt.
6- If the company’s activity is suspended more than once within two years.
7- If the company does not rectify the violations attributed to it in accordance with Article (53) of this Law.
In all cases, the Unit may, before taking the decision of suspension or revocation of the licence, appoint a temporary supervisor to monitor the extent of the company’s progress in its activity. It may also, if it considers this to be for the protection of policyholders, request the competent court to issue a decision prohibiting the taking of any proceedings against the company concerned and staying all actions filed against it, and such decision shall remain in force for one year.

Article 56

Before the decision revoking the licence is issued, the Unit shall notify the company by a process server to submit its justifications in writing within thirty days from the date of notification.
If the company does not submit its justifications within the period referred to in the preceding paragraph, or if the Unit is not satisfied with the company’s defence, it may issue a reasoned decision revoking the licence.
The decision revoking the licence shall be total or partial, as the case may be. The effect of a partial revocation of the licence shall extend only to the class or classes of insurance specified in the revocation decision. The revocation decision shall be published in the Official Gazette.

Article 57

The Unit shall notify the company of the decision revoking the licence immediately upon its issue, and the company may file a grievance against such decision.

Article 58

A company whose licence has been revoked is prohibited from issuing new insurance policies or renewing the policies in force at the time of revocation. The company shall continue to exercise the rights and perform the obligations arising from the policies issued before the revocation. The Unit may require the company to transfer its policies to another company within 6 months from the date on which the company is notified of the decision revoking the licence.
In all cases, a company in respect of which a revocation decision has been issued may not dispose of its funds or of the guarantees provided by it except after following the procedures provided for in Article (34) of this Law.

Part Eight – Branches of Foreign Insurance Companies

Article 59

Foreign insurance companies that have branches in the State of Kuwait shall obtain the approval of the Unit upon the appointment of one or more authorised managers. The manager shall carry on insurance business on behalf of the company, which shall be responsible for his acts. The appointment resolution shall also be accompanied by an official document evidencing that the authorised manager has been granted all the powers necessary to manage the branch, including the following:
1- Issuing insurance policies and their endorsements and paying the compensation due thereunder.
2- Representing the company before the Unit, the competent courts and all other governmental and non-governmental entities in relation to the business and management of the branch.
3- Receiving the notices, other notifications and correspondence addressed to the company and responding thereto.

Article 60

Branches of foreign insurance companies operating in the State of Kuwait shall be exempt from the application of the provisions of Articles (23) and (24) of this Law.
Foreign insurance companies that have branches in the State of Kuwait shall, upon renewal of the licence, submit to the Unit evidence that they are still registered in accordance with the provisions of the law of the state in which their head office is located.
The Executive Regulations shall set out the rules for granting the licence and the funds allocated to branches of foreign companies.

Article 61

Branches of foreign insurance companies shall submit to the Unit detailed financial statements of the balance sheet, the revenue and expenditure account and the profit and loss account relating to the branch in the State of Kuwait and to the head office for each financial year, in accordance with the procedures and time limits set out in the Executive Regulations.

Article 62

Without prejudice to the provisions of Articles (56) and (58) of this Law, branches of foreign insurance companies that fail to renew their licence shall cease to carry on insurance activity.

Part Nine – Insurance Intermediaries and Insurance Professions

Chapter One – Insurance and Reinsurance Brokerage Companies

Article 63

Insurance and reinsurance brokerage activity may not be carried on except through a company incorporated in accordance with the provisions of the Companies Law and licensed to do so.
The Executive Regulations shall set out the legal form of such company, its minimum capital, all brokerage operations in insurance or reinsurance and other insurance services, and the conditions, procedures and documents required for the issue and renewal of the licence and the fees payable therefor. The manager of the company shall be required to be a Kuwaiti national, working full-time and having experience in the field of insurance.

Article 64

Companies subject to the provisions of this Law may not use unlicensed local insurance brokerage or reinsurance brokerage companies, and such companies shall keep a special register in which they record the name and address of each brokerage company that carries out insurance or reinsurance operations for their account.

Article 65

Licensed insurance and reinsurance brokerage companies shall be permitted to open branches according to the volume of their business, after two years have elapsed from their incorporation.
The Executive Regulations shall set out the conditions required for opening such branches.

Article 66

Insurance brokerage and reinsurance brokerage companies shall keep registers certified by the competent authority and appoint an accredited auditor, and they shall submit quarterly reports and shall also submit the company’s annual balance sheet certified by an auditor, including the volume of operations and the commissions paid by the insurance companies with which they deal.

Article 67

Insurance brokerage companies are prohibited from the following:
1- Collecting from policyholders any additional amounts other than the insurance premium set by the insurance company.
2- Representing policyholders in the settlement of claims due to them.
3- Carrying out insurance consultancy work other than that relating to the brokerage contracts binding them with insurance companies.
4- Combining the activity of insurance brokerage with that of reinsurance brokerage.
Except for motor insurance, brokerage companies shall not be entitled to collect premiums from their clients for their benefit or in their name, and all payments by clients shall be made in the name of the insurance company issuing the policy.

Article 68

The Unit may notify a brokerage company that violates the provisions of this Law of the violations attributed to it, in order to rectify them within sixty days from the date of the notification.
If such violations are not rectified within the said period, the company shall be closed administratively by a reasoned decision of the Unit for a period not exceeding ninety days, and if the violation is repeated or continues, the company shall be closed permanently, its licence shall be revoked and it shall be struck off the brokerage register by a decision of the Unit.

Article 69

Subject to the provisions of Chapter Four of Part Twelve of the aforementioned Companies Law, the striking of the company off the register of brokerage companies and the revocation of its licence pursuant to the preceding Article shall result in the dissolution and liquidation of the company.

Chapter Two – Risk Assessors and Loss Adjusters

Article 70

No person may practise the profession of risk assessor or loss adjuster unless his name is entered in the register kept for that purpose at the Unit.
The Executive Regulations shall set out the conditions to be met by those practising these professions, and the conditions and procedures for registration in the register and its renewal and the fee payable therefor.

Article 71

Companies subject to the provisions of this Law may not engage risk assessors or loss adjusters who are not entered in the register referred to in the preceding Article.
Nevertheless, in cases requiring special technical expertise, unregistered experts may be engaged for a limited period after obtaining the approval of the Unit.

Chapter Three – Insurance Consultants and Actuaries

Article 72

No person may carry out insurance consultancy work unless his name is entered in the register kept for that purpose at the Unit.
The Executive Regulations shall set out the conditions required of those practising this profession, and the conditions and procedures for registration in the register and its renewal and the fee payable therefor.
No one other than the consultants entered in the register referred to in this Article may be assigned insurance consultancy work before the courts or in arbitration.
Furthermore, companies subject to the provisions of this Law may not entrust unregistered consultants with consultancy, studies and expert work relating to insurance.
Nevertheless, in cases requiring special technical expertise, unregistered consultants may be engaged for a limited period, after obtaining the approval of the Unit.

Article 73

No person may carry out the work of an actuary unless he is entered in the register kept for that purpose at the Unit, and the Executive Regulations shall set out the method, procedures and conditions of registration and its renewal and the fee payable therefor.

Part Ten – Penalties

Article 74

Without prejudice to any more severe penalty provided for by any other law, any person who practises the profession of risk assessor and loss adjuster, insurance consultant or actuary without being entered in the registers provided for in this Law, without renewing his registration or without obtaining the approval of the Unit shall be punished by imprisonment for a period not exceeding one year and a fine of not less than ten thousand Kuwaiti dinars and not exceeding twenty thousand Kuwaiti dinars, or by either of these two penalties.

Article 75

Without prejudice to any more severe penalty provided for by any other law, any person who makes a statement contrary to the truth or, with intent to defraud, conceals information in the statements, minutes or other documents that are required to be submitted to the Unit or that are presented to the public shall be punished by imprisonment for a period not exceeding one year and a fine of not less than ten thousand Kuwaiti dinars and not exceeding twenty thousand Kuwaiti dinars, or by either of these two penalties.

Article 76

Any person who, without acceptable excuse, delays in submitting the data requested by the Unit in accordance with the provisions of this Law and its Executive Regulations shall be punished by a fine of not less than five thousand Kuwaiti dinars and not exceeding ten thousand Kuwaiti dinars.
The same penalty shall be imposed on any person who refuses to submit the books, papers and documents to the employees of the Unit who are entitled to inspect them in accordance with the provisions of this Law or the resolutions implementing it, in addition to a judgment ordering him to hand over such papers and documents.

Article 77

The penalties provided for in Articles (74), (75) and (76) of this Law shall be doubled in the event of recidivism in committing the offence within three years from the date of the judgment in the previous offence.
In all cases, the offender shall, in addition to the principal penalty, be ordered to repay the value of the financial benefit he obtained or the value of the losses avoided as a result of committing an act in violation of the provisions of this Law.

Article 78

The Public Prosecution shall have sole jurisdiction to investigate, dispose of and prosecute the crimes provided for in this Law, and the Unit shall issue a resolution seconding a sufficient number of its employees to monitor the implementation of the provisions of this Law, inspect the books and records of the companies, detect the crimes committed in violation of its provisions and draw up the reports establishing such crimes.

Part Eleven – Violations and Discipline

Article 79

Except for the crimes provided for in the preceding Articles, every act that violates the provisions of this Law or any rules, regulations, resolution or instructions issued by the Unit shall be subject to disciplinary action in accordance with the following Articles.

Article 80

A Disciplinary Board shall be established at the Unit by a resolution of the Committee, composed of three members: a judge seconded by the Supreme Judicial Council, as chairman, and two members with experience in insurance, financial, economic and legal affairs.
The term of membership of the Disciplinary Board shall be three years, renewable once.
The Board shall hear and decide the disciplinary proceedings referred to it and brought by the Unit relating to a violation of the provisions of this Law, the Regulations or any resolutions or instructions issued thereunder.

Article 81

Any member of the Disciplinary Board is prohibited, while performing his duties, from having any interest, whether direct or indirect, with any entity subject to the provisions of this Law or from being an affiliate thereof.

Article 82

The Legal Department of the Unit shall undertake the administrative investigation of the violations set out in this Law and its Regulations that are referred to it by the Unit.
For the purpose of carrying out the investigation and performing his work, the investigator shall have the following powers:
1- The right to request any data, documents or records from any governmental entity or entity concerned with the activity of the Unit.
2- The right to hear the testimony of witnesses.
3- Summoning or requesting the attendance of any person whose statements he considers it necessary to hear.
4- The right to visit and review any record or data held by any governmental entity or entity concerned with the activity of the Unit.

Article 83

Any person under investigation or appearing before the Disciplinary Board shall have the full right to defend himself, and he may appoint a lawyer to defend him.

Article 84

The respondent shall be notified of the facts attributed to him, their grounds and the date of the investigation session at least seven working days before the date set for the investigation, and the Executive Regulations shall set out the method, time limits and procedures of notification.

Article 85

The Disciplinary Board may, after verifying the violation, impose any of the following penalties:
1- Cautioning the violator to cease committing the violation.
2- A warning.
3- Requiring the violator to retake the qualifying examinations.
4- Suspension from work or from practising the profession for a period not exceeding one year.
5- Permanent suspension from practising the work or the profession.
6- Suspension of the licence for a period not exceeding six months.
7- Revocation of the licence.
8- Imposing restrictions on the violator, such restrictions to be set out in the Regulations.
9- Removal of a member of the board of directors or a manager of a company licensed to carry on insurance activities who has failed to discharge the responsibilities provided for in this Law or the Regulations.
10- Imposing financial penalties graduated according to the gravity of the violation, up to a maximum of fifty thousand Kuwaiti dinars.
In all cases, the Disciplinary Board may order the violator to pay amounts equal to the value of the benefit he obtained or the value of the loss he avoided as a result of committing the violation, and such value may be doubled in the event of repeated violations.

Article 86

Any person on whom any of the penalties provided for in this Law has been imposed may file a written grievance against it with the Higher Committee within thirty days from the date on which he is notified of the decision in writing. The decision of the Higher Committee rejecting the grievance shall be final and may be appealed before the competent court, and failure to respond to the grievance within one month from the date of its submission shall be deemed a rejection thereof.

Part Twelve – Final Provisions

Article 87

Insurance companies and reinsurance companies existing upon the entry into force of this Law shall regularise their status in accordance with its provisions within one year from the date of publication of the Executive Regulations.

Article 88

If it is agreed, in any insurance policy, that a dispute shall be resolved by recourse to arbitration in accordance with the aforementioned laws governing arbitration, it may be agreed that the Unit shall appoint the umpire.
Disputes arising between companies subject to the provisions of this Law may also be referred to the Unit so that it may seek to resolve and settle the dispute amicably between the parties through a committee formed for that purpose, and the Executive Regulations shall set out the composition of the committee, its rules of procedure and the remuneration payable to it for performing its work.

Article 89

The Unit shall submit to the Competent Minister an annual report, to be submitted to the Council of Ministers within ninety days from the end of each financial year, on its activities, work and achievements in the development and growth of the market during the preceding year, which shall include the accounts of the Unit and the auditor’s report.

Article 90

The Unit shall prepare the Executive Regulations of this Law within six months from the date of its entry into force. Until such Regulations are issued, the regulations and resolutions in force before the entry into force of this Law shall continue to apply insofar as they do not conflict with its provisions.

Article 91

Every provision that conflicts with the provisions of this Law shall be repealed, and the aforementioned Law No. (24) of 1961 shall also be repealed.

Article 92

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall come into force from the date of its publication in the Official Gazette.

Issued on 28 August 2019 and published in the Official Gazette Kuwait Al-Youm on 1 September 2019.