JEDDAH, 3 October 2005 — A prominent Saudi insurance expert has called upon authorities to expedite licensing of new insurance companies to protect the interests of both individuals and businesses.
Speaking to Arab News, Dr. Abdalelah Saaty, chairman of the insurance council at Jeddah Chamber of Commerce and Industry, said health insurance would help cut annual government spending on medical services by SR6 billion.
He also emphasized the need for setting up a specialized higher authority to regulate insurance business in the country. He expected the Kingdom’s insurance market to triple from SR8 billion to SR24 billion within the next 10 years.
“I have told the present health minister, your budget is now SR14 billion, if you give me SR8 billion I can insure everybody in the Kingdom to help receive advanced health services,” he said, adding that the minister was impressed by the idea.
Saaty, a senior professor of insurance at Jeddah’s King Abdul Aziz University, said insurance would help patients get quick access to specialists in modern hospitals. “This is much better than waiting for months to get an appointment in a specialized public hospital,” he explained.
The Kingdom’s population is growing at the rate of 3.5 percent and it would be difficult for the government to meet their health service requirements alone as the service has become expensive as a result of high technology.
Saaty argued that the formation of a single specialized authority would help speed up the licensing process. “Once the companies receive license, it will create an insurance boom with all businesses and industries looking for insurance coverage,” he said.
The cooperative health insurance scheme, which was approved by the Council of Ministers in 1999, required more companies. About 30 companies have applied for license. According to Saudi Arabian Monetary Agency (SAMA), the Kingdom’s insurance regulator, applications of 19 companies have reached advanced stages in the licensing process while nine others are under study.
“It’s taking a lot of time for the licensing process, because it involves so many parties including SAMA, the Insurance Council, the Commerce and Industry Ministry, the Saudi Arabian General Investment Corporation and the Traffic Department,” Saaty said and emphasized the need for single specialized authority.
Saaty hoped that the companies would get their license within a year. “All companies are waiting for license after making a lot of efforts to comply with the tough requirements,” he said. He favored that all companies which have fulfilled the necessary conditions must be allowed to operate as it is good for the economy and clients.
He stressed the need for licensing re-insurance companies. “At present billions of riyals are going abroad on re-insurance. By opening reinsurance companies we can retain part of this money. Reinsurance firms will back up insurance companies and help them protect the rights of clients.”
The government has allowed foreign insurance companies to open their branches in the Kingdom, he said. “So many companies are now thinking of opening their branches in the Kingdom with headquarters in Bahrain,” he said, adding that this trend would have negative effect on the economy and the insurance market.
At present insurance contributes only 0.7 percent of the gross domestic product (GDP) and Saaty expected it to reach 3.7 percent in five years once the companies are licensed and more businesses are insured. He said insurance would also create at least 10,000 jobs within five years.
Asked about the three-year diploma course on insurance at King Abdul Aziz University’s Community College, Saaty said “It’s first of its kind in the whole Kingdom. The course includes a six-month on-the-job training at insurance companies.” The Manpower Development Council has agreed to pay 75 percent of the salaries of the program’s graduates during their training period. “We also plan to conduct research studies on insurance and hold short contingency courses for insurance executives,” he said. The program’s syllabus was prepared with the support of British and US experts and in consultation with SAMA and insurance companies.