RIYADH, 20 February 2005 — There is confusion in the insurance market with the announcement by the Saudi Arabian Monetary Agency (SAMA) that except for the National Company for Cooperative Insurance (NCCI), the status of 11 other companies listed by SAMA is not final as they have only been prequalified.
Reliable sources told Arab News that the final status of the companies that had applied for registration would be clear only after a detailed study of their data.
SAMA earlier issued the first provisional list of companies that had applied for registration under the Cooperative Insurance Companies Supervision Act. They were: NCCI; The Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf); BUPA Arabia; Al-Alamiya Insurance Co.; Al-Rajhi Company for Cooperative Insurance; Tokio Marine & Nichido; Saudi National Insurance Co. (SNIC); Arabian Shield Insurance Co. and United Cooperative Assurance Co. (UCA).
SAMA had fixed Feb. 9 as the last date for submitting applications. It also warned the public against dealing with unlicensed insurance companies or even those whose final status was not yet clear. However, the expiry of the deadline has not deterred some companies from openly soliciting customers in supermarkets, where they have put up stands complete with application forms and the full range of insurance products.
Currently, market sources point out, over 70 insurance companies are operating in the market without legal status. Those who know told Arab News that “the market is in a state of chaos because many business firms have been unknowingly signing insurance contracts with companies that have no legal status. The consequences are yet to be determined.”
Other sources said SAMA had been running a campaign to educate the business sector in the Kingdom about its future plans to regulate the insurance market. SAMA’s announcement carried a clear message to insurance companies, brokers and agents in addition to clients that Feb. 9 would be the last chance to obtain legal recognition that grants legal status to their policies.
According to SAMA, insurance companies that neither applied nor fulfilled the conditions should not engage in underwriting new business activities or policy renewals without written approval from SAMA.
In a related development, Banque Saudi Fransi (BSF) and the French insurance company Assurance Generale du France (AGF) have signed a protocol for the establishment of a joint Saudi insurance firm for which a formal application form has been submitted to SAMA.
“The new company is expected to be registered by the end of May,” a BSF spokesman told Arab News.
The protocol was signed here recently by Banque Saudi Fransi Board President Ibrahim Al-Touq and AGF President Jean Phillip Thierry. The protocol includes the terms and conditions which will govern the operations of the proposed company.
AGF is a member of the Alliance International Group, one of the biggest insurance groups in the world. The enforcement of the new insurance law is expected to give a big boost to the insurance market which is estimated to be worth SR15 billion in the next five years.
