JEDDAH, 9 May 2005 — An additional eight insurance companies will shortly be licensed to operate in Saudi Arabia, bringing the total to 22. “Studies on the applications of these firms have reached advanced stages,” said the Saudi Arabian Monetary Agency (SAMA), the Kingdom’s insurance regulator.
The new firms are Arabian Company for Cooperative Insurance, Al-Ahlia Insurance Co. for Cooperative Insurance, Arabia Insurance Cooperative Company, Takaful Taawuni Company, Saudi Arabian Insurance Company, Al-Sagr Company for Cooperative Insurance, Saudi IAIC for Insurance, and Hemayah Cooperative Insurance Co.
SAMA has asked 26 firms, which have been providing insurance services in the country, to close down their offices for failing to fulfill the conditions set by the government. “Four companies have expressed their desire to withdraw from the market and presented their withdrawal plan,” a report placed on the agency’s website said. The four firms are: Abu Dhabi National Insurance Company, Arabian American Insurance Company (AAICO), American Life Insurance Company (ALICO) and Saudi Aman Insurance Company.
The 26 companies, which were asked to wind up their business in the Kingdom, included Saudi-European Cooperative Insurance Co., SACIR, Arab-German Insurance Co., Islamic Assurance Company, Islamic Insurance Company, Delta and UCI.
The new move comes as part of SAMA’s efforts to regularize the market, which is set to exceed SR15 billion by 2009 as a result of growing demand for medical and car insurance. The Saudi Arabian General Investment Authority (SAGIA) has already licensed 13 insurance companies having a total capital of SR2.5 billion.
Ali Abdul Rahman Al-Subaiheen, executive president of the National Company for Cooperative Insurance (NCCI), has estimated the current market volume at around SR4 billion with car insurance being the largest share at 32 percent, medical insurance at 22 percent, property insurance at 17 percent and others at 29 percent. He expected that car insurance will grow to SR5 billion and medical insurance to SR6.3 billion within the next four years.
At present, the Saudi insurance market contributes less than one percent of the gross domestic product (GDP) as a result of a fall in per capita spending on insurance to SR150 per year, Subaiheen said. However, he expected that per capita spending could increase to SR750 per year, thus increasing the sector’s contribution to the GDP to three to five percent.
According to Subaiheen, some 100 insurance companies and agents with limited capabilities are operating in the Kingdom. He said the licensing of new companies would strengthen the market and enhance its credibility. “It will also help end illegal and irresponsible practices in the market,” he added.
